The Canadian economy added 63.3k net jobs in August. Even with more Canadians engaged in labour markets, the unemployment rate edged down a tenth of a percentage point to 5.9%
In yet another reversal of the prior month’s patterns, part-time employment led the gains, rising 80.2k net positions. In contrast, full-time work fell 16.9k positions. Breaking it down by type, the private sector led hiring (+95.8k), with only modest public sector hiring (+2.3k), while self-employment dropped 35k net positions.
Job growth was concentrated among core age (25 to 54 year old) workers, up 54.3k in this category. Those aged 55+ saw a net 15.4k positions added, while younger workers (15-24 years old) experienced a modest pullback(-6.5k).
Net gains were by and large in the goods-producing industries (+44.9), with construction adding 28k positions, effectively reversing the prior two months’ declines. It was a more mixed showing on the service side, adding 18.4k positions on net. Regionally, Ontario (+36.1k) and B.C. (+33.3k) led the charge.
Despite the strong headline, hours worked fell 0.4% in September. Also soft was the wage component as wage growth among permanent employees rose 2.2% year-on-year, the fourth monthly deceleration.
Key Implications
Shrug. Once again the labour force survey is best described as sound and fury, signifying little. Part-time and full-time job gains again reversed roles, with part-time leading the charge in December. So, even though we had a positive headline and an improved unemployment rate, hours worked were down. Ultimately, the trend may be the most telling: the six month average pace of gains now sits at 14.4k, pretty much where one would expect it to be given the economic cycle.
What is perhaps more surprising is the recent softness in wage growth. While concerning, we note that the less timely Canadian payrolls survey continues to show wage gains in the 2.5% to 3.0% range.
All signs are pointing to another Bank of Canada rate hike and today’s report does little to change this – indeed, it is important to remember that among the wage measures it follows, the Bank places the least weight on today’s data. With a hike this month effectively a lock, focus is now shifting to what comes next. The positive conclusion to USMCA discussions should lift a significant portion of uncertainty that had been weighing on the Bank’s forecast. We expect to see an upgraded outlook and a more hawkish tone reflecting these positive developments on October 24th.
