News from the Nest – IT Edition (April 2015)

Industry News
March 2015 saw some significant M&A activity with HP paying $3 billion for Aruba Networks; Lexmark paying $1 billion for customer management software company Kofax; eCommerce company Rakuten paid $410 million for ebook marketplace Overdrive; Cheetah Mobile is paying $58 million for mobile ad network MobPartner; TeraGo Networks paid $33 million for cloud provider RackForce; IBM bought natural language and image processing company AlchemyAPI; and in the cable TV world, Charter Communications is paying $10.4 billion for Bright House Networks.

Other companies in the news include SAP laying off 3% of its workforce (2,250, jobs); Ericsson is cutting 2,200 jobs and Sharp is cutting 6,000 jobs. Apple released details of its new Apple watch, and also had good news about its market positioning of mobile phone sales since its release of the iPhone 6.

For yet another month, the reports and surveys out of the US were all positive demonstrating a strong recovery in that economy. Canada’s news was less than stellar with unemployment creeping up to 6.8% from 6.6% in January. The collapsing oil price is anticipated to cost 8,000 jobs in the Canadian oil patch. Another report suggests that skills shortages will see Canada short by 182,000 people in the tech sector by 2019.

On a final note, the FAA moved a little bit on approval of drone deliveries in the US; however, the limitations are likely to limit that industry in the near term.

Read more Industry News…

Quarterly Job Market Update
As always, the intent of this summary is to provide some insight into Canada’s job market with input from many sources including our own “from the trenches” view.  We want to bring value to both job seekers and hiring managers with these observations and opinions.

The first quarter started with a bang, and not a good one!  The price of oil took a hammering from its mid-2014 highs above $100 a barrel down into the mid $40s.  In addition there were a slew of layoffs in the retail space with Target, Sony, Mexx and Holt Renfrew all announcing cut backs or just closing up Canadian operations.

The employment rate at the end of Q1 was 6.8%, up from 6.6% at the end of the last quarter and Canada had added 50,000 less jobs in the 12 months to March 31, 2015 than it had in the 12 months to December 31st 2014.

As another economic indicator, the TSX has been fairly steady, despite other volatility in the markets.  At the end of Q1 it had a reading of close to 15,000 (and is up from there at time of writing).  This reading was not a marked contrast from the reading of 14,700 at the end of the last quarter.

As already mentioned the price of a barrel of oil has plummeted and is currently sitting around $55 a barrel, but at the end of Q1 was below $50.  This had a significant impact in the oil patch, resulting in cut backs, reduction in spending and layoffs.  When coupled with a low Canadian dollar, however, it is not ALL bad news, and Canadian manufacturers and exporters are benefiting. One prediction suggests that the oil patch will ultimately lose about 8,000 jobs through this period; however, in that boom and bust world we will see it come back with a vengeance at some point.

One of the largest employers in Canada is the financial sector, centered primarily in Toronto, but with a significant presence in Montreal. There are many reasons why this sector remains busy including its highly competitive nature, evolving technologies, regulatory change and volatile markets.  In addition to these factors the booming US economy means that we expect this sector to remain busy.

The telecommunications sector is another big employer in Canada and remains busy.  The demands on their infrastructure, technology advancements, retiring boomers and expansion into new markets are all drivers of their need for people in addition to the ongoing need to compete in a very competitive space.

The construction industry continues to be a great place to find work, both in the trades and in the head offices of the large companies. There are construction sites in most major cities with infrastructure projects, office towers and condo developments. There has been an impact, particularly in Alberta from the drop in oil price.  I expect this to be a point in time “bust” and a recovery can be expected if not in the second half of 2015, then it should happen in the first half of 2016.  There continues to be high demand for “trades” in the home renovation and small scale construction world.

Despite the need for governments to contain costs we have seen a fairly steady demand in Federal, Provincial and Municipal Governments.  They are huge employers, and people with the right skills are always in demand. The required downsizing is generally achieved through attrition and there is always work to be done. Regulatory change, policy development and general administrative needs dictate the need for a large and skilled workforce that receives competitive incomes and very attractive pensions and benefits. The wild card here will be the effect of upcoming elections and the impact of lost oil revenue taxes.

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 index suggests a slowdown in the demand for talent in Q1 of 2015, and a slower quarter than the Q1 of 2014.

Here at Eagle we have seen significant impact on our Western Canada business however other markets remain busy.  The first quarter saw a drop in demand by more than 30% in orders, most specifically from Calgary but with some impact in other Western markets too.  The GTA remains very busy and the National Capital region is experiencing its annual government year-end slowdown, but nothing unexpected.

Read the complete Quarterly Job Market Update

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