The Canadian economy added 54.1k net jobs in July. With only a small gain in the labour force, the unemployment rate fell two ticks, to 5.8%.
The details of the report were again mixed. Part-time employment led the rise for a third straight month, adding 82.0k net positions. Full-time employment saw a small pull-back (-28.0k). By type, it was largely the public sector that hired on net in July (+49.6k), as private employers added a net 5.2k employees. Rounding it out was a decline of 0.7k in self-employment.
The service sector led the way, adding 90.5k positions on net, with notable gains in educational services (36.5k) and health care (30.7k). In contrast, 36.5k net positions were shed among goods producers, including manufacturers (-18.4k) and the construction sector (-12.3k).
The action was again concentrated in Ontario, where 60.6k net jobs were added. B.C. added 11.2k, while the remaining provinces turned in weak or negative performances.
With more Canadians employed, aggregate hours rose a respectable 0.5% month-on-month (1.3% year-on-year). It was a less positive story for wages. Average hourly earnings for permanent employees were up 3.0% year-on-year, decelerating for a second month. Wage growth above 3% was reported in less than half of major industries – the first time this year.
Dialing the lens back a notch, July saw trend (6 month moving average) job growth move back into positive territory, at 20.8k. On a year-on-year basis, job growth ticked up to 1.3%, in line with the gradual deceleration that began around mid-2017.
Key Implications
That could have been better, could have been worse. A solid headline number masked less than optimal details: all part-time hiring, and by and large public sector, driven by universities. On the plus side, the number of unemployed fell and more Canadians were drawn to the labour force – both signs of a healthy economy. A respectable gain in aggregate hours worked also bodes well for output growth.
It is definitely not time to ring the alarm given the noise of this data, but wage developments bear watching. We’re still bouncing around the 3% mark – solid by historic standards, so let’s hope the bit of deceleration in June and July doesn’t become a trend.
We’re still a ways away from the next Bank of Canada rate decision, but with this first glimpse of third quarter activity kicking things off more or less on the right foot, the conditions remain right for further rate increases. As discussed in our latest Dollars and Sense, it looks like we’re set to see another quarter-point hike this October.
