Canada’s labour market added a modest net 22k new positions, roughly on expectations. However, all the gains were in part-time job positions, which rebounded 66k after losses in July. Full-time positions gave back 44k.
Growth in the labour force outpaced job gains, pushing the unemployment rate up two tenths to 6.6%, slightly higher than expected. Once again, strong population (+96k) and labour force (+82.5k) growth swamped the more modest growth in employment.
Looking across sectors, job gains were concentrated in education services (+1.7% month-on-month (m/m), 25K), health care and social assistance (+0.9% m/m, 25k) and finance, insurance and real estate (+0.8%m/m, +11k).
The unemployment rate has now risen 1.5 percentage points (p.p.) since April 2023, but over the past year it has risen the most for youth (+3.2 p.p. to 14.5%). And job market prospects did not improve much for students in August either, with their unemployment rate rising to 16.7%, versus 12.9% last summer and the highest since 2012.
Lastly, total hours worked declined slightly in August (-0.1% m/m), leaving them up 1.4% over the past year. Wage growth cooled modestly to 5.0% year-on-year in August.
Key Implications
August’s jobs report managed a gain in jobs, but apart from that the story continues a be further cooling in Canada’s labour market. In Wednesday’s Bank of Canada’s interest rate announcement, Governor Macklem characterized Canada’s economy as having “enough slack”. This continued weakening in the job market suggests slack continues to build in the labour market, pointing to the need for further interest rate cuts.
The labour market is giving the OK for the Bank of Canada to continue its gradual quarter-point cut per rate announcement pace. We expect the Bank to cut interest rates in two more quarter point moves in October and December this year (see rates forecasts).
