Federal hiring wanes as Ottawa-Gatineau unemployment rate rises to 5.7%

Downtown Ottawa

A contraction in Ottawa’s construction sector in May contributed to the region’s unemployment rate rising for the second straight month, Statistics Canada reported Friday.

Ottawa-Gatineau’s unemployment rate stood at 5.7 per cent last month. That’s up from 5.3 per cent in April and 5.1 per cent in March, which was the lowest level in more than seven years.

Part of the story is that there were more people looking for work in May, which economists generally see as a positive indicator that reflects confidence in the local economy.

However, there was also a decline in the number of people working in Ottawa-Gatineau. There were 726,300 residents employed in the National Capital Region last month, down from 727,100 in April and 3,000 fewer people than in March.

The construction sector recorded one of the largest declines among the industries tracked by Statistics Canada. In Ottawa, construction payrolls shrank by 8.7 per cent, or 2,400 jobs, to 25,100 employees between April and May.

The employment figures come on the heels of a separate report that points to a construction slowdown in Ottawa. Earlier this week, Statistics Canada said the value of building permits issued in Ottawa in the first four months of the year is down 16.6 per cent. The softness is concentrated in the industrial, commercial and institutional sector, as the pace of new home construction continues to accelerate.

Looking ahead, work on the second phase of Ottawa’s light-rail line and the decade-long effort to rehabilitate Centre Block are among the major projects that are expected to generate work for the local construction sector.

Elsewhere, the federal government’s hiring spree appears to be slowing. The number of federal bureaucrats in Ottawa-Gatineau grew by 300 last month, the lowest number since the government’s hiring binge began last July. Since then, the ranks of the civil service have ballooned by 20.6 per cent, or 26,300 people, to 153,800 workers.

Meanwhile, the closely watched tech sector grew for the third straight month and added 400 positions in Ottawa-Gatineau to reach 46,000 jobs. That’s up from 41,300 a year earlier.

Nationally, the labour market rode a surprisingly strong wave of new jobs last month as hiring rose in key areas such as the private sector, manufacturing and full-time work.

Overall, the country registered a net gain of 54,400 jobs in May, Statistics Canada said.

Behind that number, Canada saw a surge of 77,000 new full-time positions in May, which more than made up for a decline of 22,300 part-time jobs.

The national unemployment rate edged up to 6.6 per cent, a rise of 0.1 of a percentage point, as more people entered the job market in search of work.

The fresh figures added to several robust labour market gains since the middle of last year and economists pointed to the performance as more evidence the economy's early-2017 momentum isn't about to slow down.

They also said the data release likely nudged the Bank of Canada a little closer to hiking its benchmark interest rate of 0.5 per cent.

Analysts applauded the above-expectations headline figures Friday and also highlighted most of the finer details in the report.

“There's a lot to like here,” said TD senior economist Brian DePratto, who noted it added yet another good set of data to a growing stack of positive economic numbers in recent months.

“We think the Canadian economy is in a very good place right now.”

In his research note to clients, BMO's Benjamin Reitzes called the jobs survey “a solid report almost from top to bottom.”

Bill Adams, senior international economist for PNC Financial Services Group, called the details “glorious.”

A closer look at the data showed healthy gains in some of the survey's more-desirable categories, with 59,400 new jobs created in the private sector and 68,500 new paid employee positions.

By industry, the services sector gained 31,300 jobs last month while manufacturing added 23,300 positions, including 25,300 more in manufacturing. In services, there was a gain of 25,900 jobs in the professional, scientific and technical services category.

Youth employment gave the overall number a boost as 38,200 more young people found full-time work last month. The unemployment rate for youth slipped 0.3 percentage points to 12 per cent last month as more young people participated in the job market.

The numbers easily eclipsed expectations leading up to the survey's release. Economists had anticipated a gain of 11,000 jobs and for the unemployment rate to move up to 6.6 per cent, according to Thomson Reuters.

By province, the Statistics Canada said Ontario, British Columbia and Quebec saw the biggest job gains last month.

Quebec's unemployment rate dropped 0.6 percentage points to six per cent, its lowest level since Statistics Canada started collecting the data in 1976.

DePratto said the only soft numbers in the report Friday were the still-weak data for wage growth and hours worked, although he added they did improve somewhat in May.

The agency said hourly wages for all employees grew 1.3 per cent year-over-year last month, an increase over April's all-time low of 0.7 per cent. The number of hours worked rose 0.7 per cent, the report said.

DePratto said the jobs numbers combined with other robust economic figures of late, including growth, trade and retail, will likely start to tilt the Bank of Canada towards raising its interest rate.

With reporting by the Canadian Press