General Observations:
From a jobs perspective 2016 finished much as it started, most markets were okay but not great and the oil and gas space was “hurting”. The oil patch has been hurt not only by the low price of a barrel, but also by the political uncertainty introduced by both provincial and Federal governments that crushes any investment possibilities from private enterprises. There has been some positive momentum associated with the upcoming Trump presidency, so we shall see how that plays out in the coming months and years. The Canadian dollar continues to hover around the 75c US mark which makes it more expensive for imports, and Canada imports more than it exports.
The unemployment rate at the end of the year was 6.9%, a slight improvement over the 7% at the end of September, and even better than the 7.1% of this time last year. During the previous 12 months Canada added 214,000 jobs although the majority of these were part time jobs.
The stock market continues to be relatively volatile, but perhaps that is the new norm. For the purposes of this report I focus on the TSX and it has enjoyed a reasonable period of growth over the last year, ending 2016 at around 15,300 points which was currently at around 15,000 points which was more than 200 points better than it ended last year.
As already mentioned the oil patch continues to take a pounding and we don’t anticipate much positive change before 2018. With oil settling at around $50 a barrel we are not likely to see the start of any major projects although there is some optimism that most of the “bleeding” is done. Alberta will not attract much private sector investment in the current political climate, particularly when almost any other jurisdiction outside of Canada is more business friendly.
The Canadian dollar finished 2016 at around 75c US, as opposed to the 70C US it was a year ago. A weaker dollar is good for the oil patch because they sell in US dollars and most costs are in Canadian dollars. It is also helpful to our manufacturing sector, because finished goods exported with a weak dollar mean a better profit margin. However importing raw materials becomes more expensive and generally Canada imports more than it exports so overall a weak Canadian dollar is not good for Canada.
The banking sector is one of the bigger employers in Canada, and the Canadian banks have fared well this year with their stock prices riding high. They are also prudent money managers and have been very careful with their hiring. They take full advantage of technology which can mean a reduction is client facing staff as e-banking continues to grow and even their technology projects have seen very careful hiring this year,
The telecommunications companies are other big employers in Canada and are also very cost conscious. While they demand the best talent in order to compete, they too, 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, but at a reduced rate of about 150,000 per month. The demand for skills in the US will lure talent from Canada which is good for the individuals but not so good for Canada in the long term. What has not happened, and is different from previous economic times, is that Canada’s economy has not improved along with US economy, which is one of the indicators of our “new normal” environment.
The construction industry seems to be forever busy, to which anyone trying to get work done will attest. Despite the slowdown in the big jobs like the oil sands, there appears to be a constant demand caused by infrastructure upgrades in many of our cities and we have the promise of more such work funded by our growing national debt (was that my out loud voice?).
The three levels of government in Canada are big employers. Municipal, provincial and Federal governments employ a lot of people and with the current Federal government it was expected their ranks would grow. There has been some growth in the Federal payroll, about 40,000 in 2016 but it was expected to be more. All of these governments are dealing with the issue of a fast retiring upper echelon. 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 2016 was 96, as opposed to 98 a year earlier. While that appears to be a drop, it is in effect negligible because there were less work days in December 2016 than a year earlier.
Here at Eagle we experienced a 10% drop in demand from our clients in 2016 as opposed to 2015. We also experienced a 4% increase in people looking for work. This really tells the tale of the Canadian economy in 2016, there are less jobs and more people looking. Eagle’s world is primarily in the technology space, and while we expect things to pick up in 2017 we expect to see skills shortages start to add to Canada’s economic problems.
More Specifically:
The GTA is Eagle’s busiest region, representing about 60% of our business. Not surprising given its boast as 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 has remained one of the busier markets in Canada, yet has not been as buoyant as previous years, with banks, telcos and provincial government all just a little slower with their hiring. We anticipate things to pick up in 2017 and demand for skilled resources to increase substantially.
Eagle’s Eastern Canada region covers Ottawa, Montreal & the “Maritimes”. While there is a better mood amongst the Federal civil service under the Trudeau government, I can’t say that I share their optimism given his focus on anything but job creation. We do expect a decent level of demand in the Federal government in 2017, with necessary projects requiring expertise and the steady flow (certainly more than a drip) of talent retiring. Quebec is enjoying its lowest unemployment rate in some time, and Montreal remains the hub of that activity. We anticipate that to continue in 2017. The Maritime Provinces continue to struggle to create employment and we don’t expect much change there.
Western Canada is of course comprised of the oil patch in Alberta and the rest. Some provinces have fared better than others, with certainly Alberta taking the brunt of the hit because of its resource based employment. BC was actually the fastest growing province in Canada in 2016, and Saskatchewan has fared better than other provinces with a business friendly government. The outlook for Alberta in 2017 is better, but not exciting. The other provinces should see a reasonable increase in jobs.
The Hot Client Demand.
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. Big data, 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.
Summary:
The last year was a tough one in the Canadian economy and we will continue to face challenges into 2017, with carbon taxes, a struggling oil patch, a resurgent but protectionist US economy under Donald Trump and a Federal government more interested in the environment, foreign aid, being recognised on the world stage and anything other than creating a business friendly atmosphere in Canada.
On the plus side for job seekers, there will be growth opportunities afforded by a growing number of retirees requiring replacement, and some sectors that will grow … some which we believe will be the telecommunications, technology, construction, government and the financial sector.
That was my look at the Canadian job market for the final quarter in 2016 and some of its influences.
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Kevin Dee is the founder and Chairman of Eagle (a Professional Staffing Company)
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