Highlights:
- Employment rose 35k in October, the 11th consecutive monthly increase and the best gain since June.
- Despite solid hiring, the unemployment rate edged up to 6.3% as more people looked for work.
- Wage growth picked up to 2.4% year-over-year from as low as 0.5% in April. October’s rise was helped by minimum wage hikes in six provinces, all of which were larger than last year’s increases.
- Most of October’s job growth reflected a broadly-based increase in goods sector employment, led by the construction industry. The services sector, which has accounted for most of Canada’s job growth over the last year, was closer to flat.
Our Take:
Canada’s streak of job growth continued unabated in October with employment rising 35k, well in advance of market expectations. And there were plenty of positive takeaways beyond the headline figure. Job gains were concentrated in private sector, full-time work and wage growth (helped by minimum wage hikes in several provinces) continued to trend higher from the lows recorded earlier this year. Youth labour market conditions, which Bank of Canada Governor Poloz put in the spotlight last week, also improved with employment for 15-24 year-olds rising 18k and labour force participation increasing. Other, less positive developments – the unemployment rate ticked higher and average hours worked edged lower – don’t take much away from an overall solid labour market report. The unemployment rate is still down 0.7 ppts from a year ago and hours worked are close to their 10-year average.
Today’s employment numbers reinforce some of the themes from the Bank of Canada’s latest economic outlook. The acceleration in job growth relative to last quarter points to GDP growth returning to an above-trend pace in Q4. Stronger wage growth is also consistent with their expectation that tighter labour market conditions will feed through to wages, albeit with some lag. Finally, an increase in labour force participation might indicate there is a bit more room to run on the employment side than a zero output gap would suggest. All told, we think the BoC will be pleased with today’s report but not surprised enough to raise rates again this year after a cautious tone was expressed last week.
