Job losses seen matching 1991-92 levels

Wed Feb 4, 2009 1:12pm EST
 
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By Louise Egan

OTTAWA (Reuters) - The carnage in Canada's labor market persisted in January as the recession forced layoffs across a wide array of industries, analysts say, predicting the worst multi-month string of job losses since the early 1990s.

Employers are expected to have cut 40,000 jobs in January in the third straight month of employment decline, according to the median forecast of analysts surveyed by Reuters.

They predicted the unemployment rate would jump to 6.8 percent from 6.6 percent in December, its highest level since June 2005.

The vicious circle of the economic downturn causing businesses to cut staff -- which in turn causes a further slowdown -- is in full effect, said Eric Lascelles, chief economics and rates strategist at TD Securities.

"The ball really can get rolling here and I think that's probably the stage we're at right now," Lascelles said.

"We're starting to see the layoffs happen. The economy is already clearly in recession. The question is how far does it go -- and I think it probably goes a fair bit further," he added.

If the forecasts are right, the economy will have shed 124,00 jobs from November to January -- a magnitude of back-to-back job losses not seen since late 1991 and early 1992, according to Statistics Canada data.

Jobs were relatively safe in Canada through most of 2008, when the net gain in employment was about 80,000. That compared favorably with the United States, where employers slashed 2.6 million jobs last year.   Continued...