The recession?s lingering impact has dealt ?structural damage? to the London area, one analyst says, pushing its jobless rate to a nation-leading 9.6%.
In a month that brought Canada?s heaviest job losses in nearly four years, the London-area unemployment rate shot up by half a percentage point in March ? the highest big-city rate in the country.
That?s not because of job losses, however, but because 2,600 more people started looking for work in an economy that didn?t create jobs for them.
The local economy is adding people looking for work at a faster clip than it?s creating jobs, says Statistics Canada.
?I think 9.6 is a tragedy of human capital ? it means we have people willing and able to work and they are not employed. It is really important those numbers come down,? said Harvey Filger, the city?s director corporate investment.
It?s the second straight month the area jobless rate has jumped by about a half-percentage point.
One question that begs: Is London-St. Thomas ? whose rate hasn?t been this high since November 2011, and which hasn?t topped 10% in almost three and a half years ? headed for double-digit unemployment?
While some some say that?s possible, most say it?s unlikely.
?You have the labour force rising faster than job growth,? said Robert Kavcic, senior economist BMO Capital Markets.
?The job market has not come back after the recession in London as strong as other cities. There is structural damage in the labour market there.?
By damaged, he means London has lost core manufacturing jobs that won?t come back, as plants have closed or moved.
In addition, the public sector has enjoyed provincial funding increases in recent years as ?taps were fully open, and now the province is serious about fiscal restraint,? said Kavcic.
?That is impacting health care and education, which is 60% of their budget,? he said. That?s eroded the traditional strength of London?s economy ? its diversity ? and it?s why it?s not able to create new work, he believes.
John Griffiths, director of employment services and training for Goodwill Industries, said he believes unemployment topping 10% is possible, as more youths enter the job market in coming months, pushing the total up.
?It is hard to predict. It is possible we may see things get worse,? he said Friday. ?The challenge is whether the labour pool matches the need.?
?We need to be aware that work is underway ? that we are doing all the right things like creating training opportunities. It is a matter of working the plan.?
Kavcic, however, believes 10% is unlikely, given U.S. growth is forecast at 3% and that will help London?s economy that relies on U.S. markets.
?We are expecting the labour markets to improve across Ontario over the next few years,? he added.
Derek Burleton, deputy chief economist TD Bank Financial Group. agrees it?s not likely the local jobless rate will top 10%.
?That is a real psychological barrier. If it went to 10%, that would be a real concern that there is no recovery? for London, he said.
?I think it is more likely there will be a pullback in unemployment because I don?t think this increase in worker participation will increase again.?
Still, Burleton said, it?s ?very important? the economy start to create opportunities for job seekers entering the market or the jobless rate will remain high. To create jobs, there must be U.S. growth, he said.
?This is a real concern. Much depends now on the U.S. economy gaining traction. It is an important area of growth,? he said.
At Goodwill Industries, its employment and training office sees graduating students stalled in their job searches, said director Michelle Quintyn.
?What we see at this time of year is many people looking for work who are highly educated and with experience, but jobs are at the entry level and they are not being hired.? she said.
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THE NATION
Canada: Jobless rate rose to 7.2% in March from 7 in February, 54,500 jobs lost
Ontario: Unchanged, 7.7%
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AREA UNEMPLOYMENT
? 9.6%, March 2013
? 9.1%, Feb.
? 8.5%, Jan.
? 8.4% Dec.
? 8.4%, Nov.
? 8.6% Oct.
? 8.5% Sept.
? 8.6% Aug.
? 8.5% July
? 8.5% June
? 8.3% May
? 8.5% April
? 8.6% March, 2012.
LAST TIME AT 9.6%: Nov. 2011.
LAST TIME ABOVE 10%: Oct 2009, 10.3.%
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HOW LONDON?S 9.6% COMPARES
Peterborough 10.2%
Windsor: 9%
Kitchener-Waterloo, 7.2%
Hamilton: 6.1%
Toronto: 8.4%
Ottawa: 6.2%
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LOCAL JOBS BREAKDOWN
March 2013 vs. March 2012:
? Manufacturing: 25,600; 30,800: Loss of 5,200 jobs
? Construction: 15,100; 15,300: Loss of 200
? Education: 20,100; 20,800: Gained 700.
? Health care: 40,200; 33,800: Gain of 6,400
? Business: 12,000; 10,700: Gain of 1,300
? Professional, scientific and technical: 14 100; 17,500: Loss of 3,400
? Retail/wholesale: 38,000; 32,500: Gain of 5,500.
? Restaurant and hospitality: 18,500; 15,600: Gain of 2,900
? Finance, insurance, real estate: 20,000; 19,300: Gain of 700.
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WHAT THEY SAID:
?I am concerned about the overall unemployment rate, and youth in particular. What does this say about our city . . .? It is a real problem. I am concerned about what London will look like five years from now.?
? Martha Powell, director, London Community Foundation, which in October reported local youth unemployment was 18.7%
"We need to keep pressing forward with the plan we have and for the next five to six months we will see holes dug in the ground. It does not happen overnight. We are trying to get a handle on this.?
? Coun. Bud Polhill, acting mayor.
?We see it as glass half full, that people feel confident they can get a job. There may be better prospects going forward.?
? Derek Burleton, deputy chief economist, TD Bank Financial Group, on how more people looking for work is seen by economists as a sign of confidence.
Source: http://www.lfpress.com/2013/04/05/londons-unemployment-rate-soars-to-96
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