- Canadian employment fell in July by a net 24.2k positions. The unemployment rate rose two ticks to 5.7% as the decline in jobs combined with a few more Canadians engaging with labour markets.
- The decline was split fairly evenly between full-time (-11.6k) and part-time work (-12.6k). However, the bulk of the drop was in private sector employment (-69.3k), and among employees (-51.8k). Were it not for a modest gain in self-employment (+27.7k), the headline would have been worse.
- The service sector led the decline (-26.3k) with notable drops in retail & wholesale trade (-20.6k), transportation (-14.8k) and other services (-10.6k). The goods-producing sectors held up on balance (+2.1k), but this was entirely due to strong hiring in the construction sector (+25.0k); all other major sectors shed jobs on net last month.
- Regionally, Alberta recorded the largest net drop (-14.3k), with Ontario also reporting a modest decline (-10.7k). Only Quebec reported a notable gain (+16.6k).
- The heat in this report was in wages as the hourly rate for permanent employees rose 4.5% year-on-year, the fastest pace since early-2009. Conversely, hours worked fell 0.7% on the month, bringing the year-on-year pace to just 0.7%.
Key Implications
- Unlike the relatively hot GDP figures of late, the employment ‘three-peat’ is one of effectively zero net job gains since April. This is concerning at first glance, but we should remember that this pause in job growth is coming on the heels of a string of robust gains earlier in the year. Net employment is up 353k year-on-year, driven by and large by full-time work.
- What’s more, while it is being flattered somewhat by weakness around this time last year, wage gains accelerated well beyond market expectations, suggesting that the recent pause in net hiring may be reflective of tight labour conditions. The core-age (25-54) participation rate remains near all-time highs, and at 5.7%, the unemployment remains near historic lows.
- All of this is to say that the Bank of Canada remains caught between two opposing trends: relatively healthy domestic conditions, and a worsening external backdrop. Unless we see a marked shift in either of these, the Bank will likely remain happy to sit on the sidelines.
