- The Canadian labour market shed 40k positions in August, with full-time employment down 77k and part-time employment up 37.5k.
- The unemployment rate rose by 0.5 percentage points, to 5.4%, as August’s jobs decline was met by a 66k expansion in the labour force. The participation rate also rose to 64.8% (up 0.1 percentage points).
- By industry, employment losses were felt in educational services (-50k) and construction (-28k), though somewhat offset by gains in professional, scientific, and technical services (+14k), as well as ‘other services’ (+15k).
- The bulk of the jobs decline was concentrated in the public sector (-28k), although employment also fell in the private sector (-4k). Meanwhile, self-employment was down 8k.
- On a geographic basis, the report noted employment losses in British Columbia (-28k), Manitoba (-10k), and Nova Scotia (-5.2k). Gains were noted in Quebec (+27k), while Ontario was flat on the month.
- Lastly, total hours worked were unchanged in August following July’s 0.5% monthly decline. Wages were up 5.4% year-on-year, marking an acceleration from July’s 5.2% pace.
Key Implications
- That’s three negative job prints in a row, with the accumulated job losses now reaching 114k. With the bounce back in the number of people engaged in the labour market, the unemployment rate has decisively moved back towards a more sustainable level of 5.4%.
- Though this report is likely to get some people worried, we’d argue that a slowing labour market is what is needed to ensure that this high inflation environment does not become entrenched. The labour market is coming from levels of extreme tightness and has been due for some giveback. This is exactly what is currently playing out.
- This report shouldn’t cause the Bank of Canada to change course. Wage growth has increased again and domestic demand driven inflation is only continuing to rise. This has us expecting a 50 point hike in October, with the policy rate getting to 4% by year-end.
