CALGARY - The Conference Board of Canada laid out a grim outlook for employment for this year and next on Monday, saying the Canadian economy fell "off a cliff" in the first three months of this year.
Pedro Antunes, the board's director of national and provincial forecasts, told a conference Monday that unemployment will steadily rise this year and peak at 9.5 per cent in the middle of 2010.
"We've seen some pretty dire monthly numbers already," Antunes told reporters.
"We see employment losses continuing through the end of the year, but not as sharp a decline as we'll have in the first quarter."
The think-tank estimates Canada's economy shrank at a seven per cent annual pace in the first quarter, Antunes said.
"It's not really a difficult guess to make because if you look at the monthly indicators, if you follow monthly (gross domestic product) by industry, it's kind of fallen off a cliff in the latest months," he said. "It's very scary."
Conference Board chief economist Glen Hodgson said in an interview that Canada has likely just emerged from the worst quarter in 35 or 40 years.
"Seven per cent annualized in Q1 is really painful and that reflects the contraction of exports and the pullback in investment that's due to the U.S. financial crisis."
But, the pace of the slowdown will ease later in the year, resulting in a 1.7 per cent contraction for the year as a whole, Antunes said. That's far worse than the Conference Board's previous estimate of half a percentage point decline for 2009.
"It was really around commodity prices and the impact that's having on real incomes in our economy. We saw the price of everything fall," Hodgson said.
"That's flowing into real incomes and also into investment. So you see all that happening, we really had to pull our forecast back so it was more reflective of reality."
Statistics Canada has reported January's GDP shrank by 0.7 per cent and economists estimate the January-March quarter as a whole will contract at a seven to eight per cent annual rate.
The Organization for Economic Co-operation and Development estimates Canadian GDP will shrink by three per cent this year and unemployment will rise to 10.5 per cent next year.
Antunes said the Canadian manufacturing and construction sectors will suffer the most job losses, which means Ontario and Alberta will bear the biggest brunt.
There will be 180,000 jobs lost in manufacturing and 90,000 in 2009.
Marie-Christine Bernard, the board's associate director of provincial forecasts, said Alberta's real GDP will fall by about 1.8 per cent -- the first decline since 1986.
Oil prices are expected to average around US$48 per barrel, and in 2010, they should hover around US$58. That's lower than the prices many analysts say big oilsands projects need to be economically viable.
"There is not much positive news for Alberta if we look at the large drop in oil prices," she said.
She said she is forecasting an unemployment rate of 5.9 per cent this year, and 6.9 per cent in 2010 for the province.
Yet 17,000 workers are expected to migrate into Alberta from elsewhere in the country, where the situation is even more bleak.
"It's really not looking good for Ontario," Bernard said, attributing that province's problems to plummeting auto sales.
The unemployment rate in that province is expected to hit 10 per cent by the end of this year, she added.
