Oil and Gas Labour Force Statistics

Statistics Canada releases estimates of the number of employed and unemployed Canadians monthly. Governments, journalists, economists and business planners rely on and report on this data regularly to shed some light on Canada’s workforce health. It is important to understand what each number represents to properly interpret the data. 

7.8%? 6.8%? 5.8%? – Why so many different unemployment rates and what are they all measuring? Can they be compared? 

In a nutshell – no. Let us try to explain! 

First a few definitions: 

Labour force: People 15 years or older, who, during the reference week, were employed or unemployed. 

Unemployed: People who weren’t working during the reference week but had looked for work in the past four weeks and were available for work. People who were laid off or had a new job starting in four weeks or less are considered unemployed. 

Unemployment rate: The percentage of unemployed workers in the total labour force.

Seasonally adjusted: Data comes from Statistics Canada and fluctuations are caused by seasonal, cyclical and irregular movements. Seasonally adjusted data are those where regular annual events such as production cycles, climate, holidays and vacation periods are eliminated using a complicated computer program. 

NAICS: The North American Industry Classification System (NAICS) is a classification of businesses by activity type and is used by government and business in Canada, Mexico and the U.S. The data we share comes from three main NAICS: oil and gas extraction, support activities for oil and gas extraction and pipeline transportation. 

Now back to unemployment rates:

7.8% – This is the seasonally adjusted unemployment rate for Canada as a whole in March 2020 that is widely reported in the news.  
(Statistics Canada. Table  14-10-0287-03   Labour force characteristics by province, monthly, seasonally adjusted)

6.8% – This is the seasonally adjusted unemployment rate for Canada’s Natural Resources industry in March 2020 which includes forestry, fishing, mining, quarrying and oil and gas. 
(Statistics Canada. Table  14-10-0291-01   Labour force characteristics by industry, monthly, seasonally adjusted, last five months (x 1,000))

5.8% – This is the unemployment rate in March 2020 for the three areas of industry activity that PetroLMI focuses on. The data we receive monthly are unadjusted for seasonality and are calculated on three-month moving averages.  
(Statistics Canada. Labour force survey (LFS) estimates, by North American Industry Classification System (NAICS) for Canada and provinces, unadjusted for seasonality, three-month moving average – custom order).

A three-month moving average is used by Statistics Canada for data at the NAICS level because the further you drill down (pun intended), the less accurate the data becomes. Using three-month moving averages increases the accuracy of the numbers but smooths month-to-month changes. As a result, we likely won’t see the full effects of COVID-19 or the OPEC price war reflected in the oil and gas industry data for a few months.  

Even when using a three-month moving average, the monthly labour force data for the oil and gas industry at the regional level and the industry sub-sector level are subject to a wider margin of error. But this doesn’t mean the information is not valuable – it just means caution is needed when interpreting it. The Careers in Oil + Gas website also publishes annual Labour Force Survey data – data that can be considered more accurate. 

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