Canadian Labor Statistics: Headlines Overstate Improvement

October 9, 2009

Employment jumped 30,600 in September on top of a 27.1K advance in August, and the jobless rate dropped by three-tenths to 8.4%, its first decline in 14 months.  Those headlines surprised analysts, where conventional wisdom was looking for 8.8% unemployment and a moderate loss of jobs.  But…

  • The jobless rate fell in part because of a 24.5K contraction of the labor force, which rose just 0.4% over the past year.  Discouraged workers gave up looking or went into business for themselves.  Self-employment increased 2.9% on year.
  • The growth in jobs was concentrated in three areas: manufacturing (up 26.1K), construction (+24.6K), and education (+17.1%).  From a year earlier, these sectors saw jobs decline by 11.1%, 7.4%, and 1.0%.
  • Overall service sector jobs fell 15.6K in August and were unchanged from a year earlier.
  • Public-sector employment (up 36.4) accounted for September’s entire net increase.
  • Part-time workers fell by 61.0K last month.

All that said, it looks like Canadian unemployment will top off below 9%, and the July-August combined increase in total employment of 57.7K is analogous to a  pace of U.S. job gains amounting to 224K per month.  Subdued wage pressures and a quickening pace of hours worked per employee may promote further hiring just ahead.  The Bank of Canada has warned that Canadian dollar appreciation could jeopardize the recovery.  But based on data trends, it looks like Canada’s central bank is likely to start lifting interest rates sooner than the Fed.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.



2 Responses to “Canadian Labor Statistics: Headlines Overstate Improvement”

  1. Yohay says:

    The improvement in employment puts pressure on the BOC. Didn’t they declare not to raise rates till late 2010?

  2. Indeed they have, contingent upon inflation developing in a subdued manner as expected. As long as the medium-term inflation target of 2% is not jeopardiized, they have said there will not be a rate increase before the middle of 2010.