Employment in Canada was effectively unchanged in April, dropping 1.1k net positions. With only a modest climb in the number of people looking for work, the unemployment rate remained unchanged at 5.8%.
Beneath the soft headline numbers was a more encouraging split. Full-time employment gained 28.8k net positions as part-time employment dropped 30k.
In terms of broad types, it was private sector employment that led the way. Private employment was up 28.0k net positions, while the public sector shed 13.6k net positions. With a 14.5k net gain in employees, it was self-employment that brought the overall number into negative territory, down 15.6k in April.
Examining the industry split, it was trade (-22.1k) and construction (-18.9k) that led the way lower, while professional services (+21.3k) and accommodation and food services (+16.9k) eked out gains on the month. The remaining categories were generally close to, but below zero net change on the month.
Among the Provinces, it was Quebec that took the lead again in April, but this time in reverse (-13.8k; March: +16k). Modest gains in Ontario (+9.3k) were not enough to offset the decline as the other provinces turned in mixed performances.
Despite the shifting towards full-time employment, aggregate hours worked were little changed again in April, leaving the year-on-year pace at 1.9%, well below Q1’s 2.7% average pace. It was a more positive story on wages, as the hourly rate for permanent employees rose 3.3% in its best performance since 2012.
Key Implications
Don’t let the headline number fool you, this really wasn’t that bad of a report. Full-time employment rose again, and the employee vs self-employment mix was encouraging. Wage growth was solid. The fly in the ointment was again hours worked, although this is less of a surprise this month given the soft headline jobs number.
With volatility the name of the game for this report, the trend is your friend. On a six month moving average basis, jobs growth stands at 17.4k. This is basically ‘about right’ – with the unemployment rate hanging near a 40 year low and little in the way of labour market slack a more modest trend pace is to be expected. We expect employment gains to continue trending around the 15k to 25k pace as the year progresses.
Tightness may be slowing the net job gains, but it is also keeping wage growth up. Not only was April the fourth month of above 3% wage gains, the breadth seen is encouraging, as 11 of 16 major industries reported wage gains above the 3% mark, rising to 13 of 16 in the weekly wage data.
The wage data will likely be closely scrutinized by the Bank of Canada, which has identified 3% growth in its ‘Wage-common’ measure as a signal that labour market slack has been absorbed. Today’s data may only carry a small weight in that measure, but its timeliness gives us a first glimpse at the potential evolution of the Bank’s thinking. A modest acceleration in wages and the improved breadth should translate to less slack by their measure. On this basis, today’s data could probably be put in the ‘hawkish’ column, but with many internal and external uncertainties unlikely to be resolved before their next rate decision, the balance remains tilted in favour of a July rate hike.
