Quarterly Job Market Update Across Canada for Q2 2017
By Kevin Dee,
Chairman of the Board at Eagle
General Observations About the Canadian Job Market
The unemployment rate at the end of the first quarter was 6.5%, an improvement over the 6.7% unemployment rate at the end of the last quarter. During the previous 12 months, Canada added 351,000 jobs (almost 250,000 full time).
For the purposes of this report I focus on the TSX and during the second quarter it slipped about 400 points from 15,600 to around 15,200.
The oil patch continues to struggle, and while the price of a barrel has been in and around the $50 a barrel range, it actually finished the second quarter down in the $45 range. The foreign investment money that exited the Canadian oil patch is unlikely to return unless there is a significant shift in political support for this sector. Even the approval of some pipelines has not generated the positive job impact it might have done a couple of years ago.
The Canadian dollar had seemed to be settled around the 75c US level, but during Q2 edged up to 77c. (It should be noted that post Q2 an interest rate increase has driven the Canadian dollar even higher. It remains to be seen whether the increased cost of borrowing will have a negative impact on the Canadian economy.)
There is little change in the banking sector, which is one of the bigger employers in Canada. The talent demands for the banks address areas such as regulatory changes, new product development, new service offerings and addressing the aging workforce. On the other side, new technology and offerings also displaces some of the roles traditionally found at the banks. The banks remain a good place to find employment, but increasingly the skills needed are specialised.
The telecommunications sector is another large employer in Canada. Like the banks, this sector is operating in an environment affected by new technological change, demographic pressures and regulatory change in addition to extreme competition. While they demand the best talent in order to compete, they are also careful about keeping employment costs under control, particularly as they are also acquisitive, which can mean a big focus on integration of acquired companies. Some of the drivers of demand here include the highly competitive nature of the business, investment in infrastructure, technological innovation and a need to plan for a retiring "Boomer" workforce.
The US economy continues to add jobs in significant numbers, averaging more than 200,000 jobs a month over the last quarter. The demand for skills in the US is luring talent from Canada which is good for the individuals but not so good for Canada in the long term.
The demand for the "trades" continues unabated, as the construction industry seems to be forever busy. Cranes dot the skies of Canada's largest cities, and home renovation projects are hard to staff!
The three levels of government in Canada are big employers. Municipal, provincial and Federal governments employ a lot of people. Under the current Liberal administration the Federal workforce has grown significantly, with about 150,000 employees. All levels of government are dealing with the issue of retiring "boomers", among the executive ranks in particular. The pensions are so lucrative that large numbers of civil servants are eligible for, and invariably take, retirement at a very early age. This will create opportunity for new jobs, but will also result in a significant brain drain from our government.
The Canadian Staffing Index is an indicator of the strength of the largest provider of talent in any economy (the staffing industry) and an excellent barometer of the health of Canada's economy. The reading at the end of the second quarter was 110, which was unchanged from the first quarter. The reading is not adjusted and so is affected by number of available working hours etc. Having said that, the indication is a positive one.
Here at Eagle, we experienced consistent demand from our clients in the the first six months of 2017. This is a positive indicator given that demand represents a 25% increase in demand over the fourth quarter of 2016. Eagle did see a big increase in people looking for work in the first quarter (20%) and the second quarter saw another increase of 16%. There could be many factors at play, but one that we are seeing is both an increased demand for contract talent and an increased interest in the gig economy by professionals.
Regional Job Markets Across Canada
The Greater Toronto Area(GTA) is Eagle's busiest region, representing about 60% of our business. It is also the 4th largest city in North America, containing more than 50% of Canadian head offices and with a population of approximately six (6) million. This market continues to be one of the busiest markets in Canada, and we see strong demand from our clients for skilled talent. There is some concern that new legislation from the Ontario Government (Bill 148) will have a negative effect on the temporary help market in particular.
Western Canada continues to be most impacted by the woes in the oil patch, but there are some positive indicators. The oil patch has settled into its "new normal" and continues to employ a lot of people, albeit nowhere near the highs of the boom times. The various levels of government are working hard to replace some of those jobs by attracting new industries, such as technology companies, offering educated and affordable workforces, especially compared to Silicon Valley and more affordable and yet attractive lifestyles. The Conference Board expects Alberta to be the fastest growing province in Canada for 2017. The BC housing market has been affected by recently introduced legislation to curb foreign investment and a minority government will mean less affective decision making and an uncertain economy.
Eagle's Eastern Canada region covers Ottawa, Montreal & the "Maritimes". Ottawa is very much a government town again, although there are some smaller tech companies rising from the ashes of Nortel, JDS and the previously large tech sector. The government continues to employ a lot of people (22,000 more in The NCR since the Liberal government took office) but the unemployment rate in Ottawa rose steadily in the second quarter. Quebec leads the country in job gains, and have improved their unemployment rate to 6% and added 122,000 jobs in the last 12 months. The Maritime Provinces continue to struggle to create employment and we don't expect much change there.
Top Skills Demanded from Eagle's Clients
At Eagle our focus in on professional staffing and the people in demand from our clients have been fairly consistent for some time. Program Managers, Project Managers and Business Analysts always seem to be in demand. It might just be our focus, but Change Management and Organizational Excellence resources are in relatively high demand too. Digital, big data, data scientists, analytics, CRM, web (portal and self-serve) and mobile expertise (especially developers) are specializations that we are seeing more and more. On the Finance and Accounting side, we see a consistent need for Financial Analysts, Accountants with designations and public accounting experience plus Controllers as a fairly consistent talent request. Expertise in the Capital markets, both technical and functional, tends to be a constant ask in the GTA. Technology experts with functional expertise in Health Care is another skill set that also sees plenty of demand. This demand fluctuates based on geography and industry sectors, so we advise candidates to watch our website and apply for the roles for which they are best suited.
Outside of Eagle's realm some of the in-demand skills include the classic tradespeople, drivers, and new tech skills like Artificial Intelligence, Robotics, video gaming skills etc.
Canada added 351,000 jobs in the last year which is good news for today's job seekers. Forecasters are optimistic for the next twelve months, in fact the Bank of Canada just raised interest rates sparking a recovery for the Canadian dollar. If we can keep new legislation (CASL at the Federal level, and Bill 148 in Ontario would be just two examples) from hurting job growth then we should enjoy a period of growth.
For job seekers there are bright spots, caused by demographic shifts (retiring Baby Boomers), jobs moving to Canada from more expensive places like Silicon Valley and companies developing new technologies. The large employers, such as banking sector, insurance sector, retail sector, telecommunications sector and the construction industry will always require large workforces representing job opportunity. The growth of the "gig economy" creates new opportunities for people to define their own destiny and become mini-entrepreneurs, or build new enterprises.
The effect of US policy changes by the Trump administration remain to be seen. Having said that, early indicators could see immigration (positive for Canada); trade agreements & protectionist policies (possibly negative for Canada); and defense (possibly negative for Canada) all having some impact.
Job seekers should research and understand the growing sectors and where the in-demand jobs are. They also need to be willing to go where the work is! If I was looking for work I would be moving to the larger centres, investing in in-demand skills and increasing my marketability with the right "attitude".
That was my look at the Canadian job market for the second quarter of 2017 and some of its influences.