News from the Nest – Finance & Accounting Edition (October 2015)

October 2015
NEWS from the NEST
Finance & Accounting Edition
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QUARTERLY JOB MARKET UPDATE

This has been a tough year thus far in Canada. With GDP contracting for each of the first two quarters, Canada suffered a “technical recession”, and many businesses felt it! The primary reason for the malaise has been the impact on the oil sector caused by a low price per barrel. Another impact has been the economic meltdown in China, which is a large consumer of Canadian raw materials.

The employment rate at the end of Q3 dipped to 7.1%, from 6.8% in Q2. This was attributed to more people entering the workforce, but still means a lot of people looking for work. Canada added about 31,000 jobs in Q3 and has added 161,000 in the 12 months to September. This is down from the 176,000 jobs over the 12 months to June.

As another economic indicator, the TSX has been fairly volatile. At the end of Q3, the TSX was at about 13,300 which was down about 1,200 points from the 14,500 reading at the end of Q2.

As already mentioned, the price of a barrel of oil has plummeted and is currently sitting around $50 a barrel. The price has fluctuated significantly having reached lows near $40 a barrel during Q3 but was at $55 at the end of Q2. There is no relief in sight for the oil companies yet, meaning continuing cut backs, reduction in spending and layoffs.

The Canadian dollar has also been suffering and at the end of Q2 a Canadian dollar was worth less than 75c US, compared to 80c at the end of Q2. This is not ALL bad news, and Canadian manufacturers and exporters are benefiting; however, travel is costly as is importing materials.

The banking sector continues to be a big user of talent and one of the largest employers in Canada. The primary demand for talent is in Toronto, but there is also demand in Montreal. While the competitive nature of the industry requires investment in innovation, technology and responsiveness to regulatory change there is also a need to control costs. We have seen some fluctuation in demand as certain parts of the financial sector have been reducing staff while others have been hiring.

The telecommunications companies are big employers in Canada and are also very cost conscious. While they demand the best talent in order to compete, they are also careful about keeping employment costs under control. 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.

A recent US report cites labor shortages in the US construction industry and there is no doubt we will see the same here in Canada. It is an industry that is in demand, and other than the current “hiccups” in the oil sector, which will pass, there will be a constant demand into the future. From cranes dotting the landscapes of our cities, through infrastructure work on our highways and home improvement projects everywhere the signs of an in-demand industry are plain to see.

The upcoming Federal election has the usual effect of dampening demand for resources, as projects are put on hold to ensure they are still the mandate of the new administration. Governments everywhere are being very careful with their spending; however, there is always some demand, whether it is at the Federal, Provincial or Municipal level. They are huge employers, and people with the right skills are generally always in demand. 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. We can expect to see a slowdown in this sector that will depend upon whether there is a change in government, and might last from 3 to 6 months. The newish Alberta government has not yet ramped up its new projects, but it is expected that work will be generated as they change the focus of the administration. Having said all of the above, one area of demand is in the transportation space where governments are making investments across the country, thus creating job opportunities.

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 latest score suggests a continued slowdown in demand for talent in Q3. We can expect an increase in demand for staff augmentation resources in Q4 as we recover from the “technical recession”.

Here at Eagle, we continue to see significant impact on our Western Canada business; however, other markets remain fairly steady. Year-over-year, the number of orders received has dropped about 20%, which can largely be attributed to the oil patch. Other markets have been relatively consistent across the country.

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