Labour Market Briefing – London Economic Region in January 2017

Labour Market briefing – London Economic Region in January 2017

By Emilian Siman

 

How should we proceed next?

Happy New Year and hopeful beginnings to everyone in the regional economy. The latest Labour Force Survey (LFS) results suggest an improvement of the provincial labour market during 2016. “Ontario’s economy generated its best job growth in three years during 2016” wrote Chief Economist, Helmut Pastrick from Central 1 Credit Union. During 2016, the total employment in Ontario grew slightly over one percent, whereas in the prior two years the growth was below one percent (Pastrick, 2017). As illustrated in Figure 1, Ontario’s unemployment rate decreased to 6.5 % from 6.8% in 2015, the lowest rate in the past five years. These are very motivating news for the 2017 beginnings.

Labour market briefing - London Economic Region in January 2017 - Figure 1

Source: Statistics Canada, CANSIM, table 282-0123

Figure 1

However, let us see how the London Economic Region’s (LER) labour market has been performing during 2016. The unemployment rate in 2016 grew slightly (0.2%) relative to 2015 (5.9%), but overall, in the past five years, it followed a constant improving pattern. Probably one of the most surprising improvements in the province (see Figure 1). On a month-to-month comparison, the LER’s unemployment rate in December 2016 had increased a touch (0.1 %) relative to November of 2016, from 5.6 % relative to 5.5 %. In a year over comparison (December 2016 relative to December 2015), the unemployment rate increased by 0.3 percent, 5.6 % relative to 5.3% respectively.

Compared with the provincial performance, specifically the employment growth in the province, the employment in the LER grew only by 0.15% relative to 2015, the smallest growth in the past three years. The five years’ time frame reveals a 2.54% growth in the total LER’s employment in 2016 relative to 2012. These results call for action. The battle to create new jobs, or attract employers in the LER must continue with a higher intensity during 2017. The positive aspect regarding the 2016 employment in the LER is that the positive change in the full-time employment (4,200 persons) between 2015-2016 over compensated the negative change in the part-time employment (-3,700 persons), indicating an overall improvement in the quality of employment. This phenomenon is even more evident when we change it to a five-year time frame comparison (see Table 1). A question remains unanswered yet: how should we proceed further?

Table 1. Employment in the London Economic Region (x 1,000 persons)

Labour force characteristics

2012

2013

2014

2015

2016

change 2015-2016

% change 2015-2016

change 2012-2016

% change 2012-2016

Total

322.7

323.7

324.8

330.4

330.9

0.5

0.15

8.2

2.54

Full-time

253.3

253.5

256.1

261.6

265.8

4.2

1.61

12.5

4.93

Part-time

69.4

70.2

68.7

68.8

65.1

-3.7

-5.38

-4.3

-6.2

 

This positive turn in the past five years has been reflected in the unemployment results, which have been following a dipping trend, with a marginal reverse in 2016 (about 800 persons), see Figure 2. On the month-to-month comparison, December relative to November of 2016, the unemployment increased a touch (around 200 persons), 19,200 people relative to 19,000 people respectively. In a year over comparison (December 2016 relative to December 2015), the unemployment in the LER increased by about 2,000 people, 19,200 people relative to 17,200 people respectively. The 2016 reversed trend could reflect a spark in the interest of the discouraged job seekers to participate to the regional labour market. As it is well known by now, during 2016 numerous efforts on multiple fronts have been unfolded by the provincial government through its Employment Ontario service providers and other workforce related community organizations to re-engage this group with the labour market.

The “not in the labour force” group in the LER has been increasing constantly during the past five years (see Figure 3) as a consequence of the generational change in the labour force, or the population migration from denser and more expensive to less crowded and cheaper locations, or the increased quest for education, or other well identified reasons.

The participation rate in the LER has been decreasing by 2.1 percent in the past five years, see Figure 4. This is a trend observed in other markets as well, like Canada and Ontario. However, it is important to acknowledge that the participation rate in the LER was below the national and provincial rates, and its variation during the past five years is slightly larger than for the previously mentioned geographies (Figure 4). In the month-to-month time frame comparison (November to December 2016), the participation rate in the LER decreased by 0.2%, while in the year-over time frame comparison (December 2015 to December 2016), the participation rate in the LER decreased by 2% (CANSIM, 2017a). These results put us in the alert mode. Something has to change in 2017 to revert this trend.

Labour market briefing - London Economic Region in January 2017 - Figure 2

Source: Statistics Canada, CANSIM, table 282-0123

Figure 2

 

Labour market briefing - London Economic Region in January 2017 - Figure 3

Source: Statistics Canada, CANSIM, table 282-0123

Figure 3

 

 

Labour market briefing - London Economic Region in January 2017 - Figure 4

Source: Statistics Canada, CANSIM, table 282-0123

Figure 4

The employment rate in the LER has been slightly lower than nationally and provincially, see Figure 5. However, the performance in the past five years can be characterized as “maintaining the status quo.” One could observe, that in the LER the employment rate had a slightly larger variation than nationally and provincially, but it’s visible the intent to maintain it around the 60% level. In the month-to-month time frame comparison (November to December of 2016) the LER’s employment rate dropped by 04 %, while in the year over time frame comparison (December 2015 versus December 2016), the LER’s employment rate dipped by 2.2 % (CANSIM, 2017, January).

Labour market briefing - London Economic Region in January 2017 - Figure 5

Source: Statistics Canada, CANSIM, table 282-0123

Figure 5

 

All these results indicate a story of marginal performance of the LER labour market during 2016, but with a solid foothold for the race beginning in 2017. The positive aspect in this story is that there is room for improvement to align the performance of the labour market in the LER to the level of the performance of the labour market in the province, or to surpass it. The employment growth in Ontario is forecasted to be around 1.1 % in 2017 and 0.9 % for 2018 (BMO, January 2017). The economic growth (real GDP growth) for the province in the next two years is forecasted to be around 2.5 % in 2017 and 2.2 % in 2018, a modest level.

The potential and resilience of the LER economy are enhanced by its location nearby the US border, its natural resources, touristic beauty, diversity of industries, educated labour force and entrepreneurial spirit. Good signs of recovery are coming from our largest trading partners the US and Europe.  The export performance has been somewhere from mediocre to stellar for 10 out of 11 Canadian sectors in 2016 (Hall, 2017, January). It’s the beginning of a new year, “all the stars” seems to be aligned and we have to think of the best regional solutions to be effective and efficient. How do we proceed next?

 

 

References

BMO (2017, January). Provincial economic outlook. Our key economic forecasts for the Canadian provinces. January 6, 2017. Retrieved January 12 from https://economics.bmocapitalmarkets.com/economics/forecast/prov/Provinci...

CANSIM (2017a). Table 282-0122. Labour force survey estimates (LFS), by provinces and economic regions based on 2011 Census boundaries, 3-month moving average, unadjusted for seasonality. Statistics Canada. Retrieved January 12, 2017 from http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2820122&ta...

CANSIM (2017b). Table 282-0123. Labour force survey estimates (LFS), by provinces, territories and economic regions based on 2011 Census boundaries, annual (Persons), 2001 to 2016. Statistics Canada. Retrieved January 12, 2017 from http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2820123&ta...

Hall, P. (2017, January). 2017: Policy pivot? EDC Weekly Commentary. January 12, 2017. Retrieved January 12, 2017 from http://www.edc.ca/EN/Knowledge-Centre/Subscriptions/Weekly-Commentary/Pa...

Pastrick, H. (2017). Ontario economic briefing. Vol. 23, Issue2), January 2-6, 2017. Retrieved from https://www.central1.com/sites/default/files/uploads/files/analysis_repo....

 

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