Fundamental Analysis

Canadian Job Market Unstoppable in November, Adding 79.5k Jobs

Typography

The Canadian labour market added to its winning streak last month, adding a whopping 79.5k jobs in November and marking the 12th straight month of employment gains. Strong hiring and a largely unchanged labour force led the unemployment rate to tumble to 5.9% from 6.3% in October.

Part-time jobs led the gains, up 49.9k, but full-time employment also increased robustly, rising 29.6k. Full-time jobs are up 3% year-on-year - its fastest pace in fifteen years.

Job gains were concentrated in the private sector (+72.4k), with the public sector kicking in an additional 10.6k.

Both goods and service-producing industries added positions at a solid clip. Goods industry jobs were up 37.4k, led by manufacturing, which added 30.4k, with construction kicking in a solid 16.8k. Services industries added 42.1k, with trade industries accounting for nearly all of the gains, up 38.8k.

Regionally, Ontario accounted for half the gains, up 43.2k, pushing the unemployment rate in the province to 5.5% (from 5.9%). Quebec also added a healthy 16.2k jobs, leading the unemployment to a new record-low of 5.4% (from 6.1% in October). Alberta also saw a significant drop in its unemployment rate to 7.3% (from 7.8%).

The hourly wage rate accelerated to 2.7% on a year-on-year basis from 2.4% in October. The only fly in the ointment was a deceleration in hours worked to 1.0% (y/y) from 2.7%. However, much of this was a base year effect, with a surge in hours worked in November 2016.

Key Implications

The Canadian labor market appears unstoppable at this point, with a twelfth consecutive month of job gains. During the last 40 years the unemployment rate has only been (marginally) lower in one month - December 2007 when it hit 5.8%.

With strength concentrated in full-time work, there is little doubt that the economy is operating at full capacity and pushing into excess demand territory. This notion is corroborated by the acceleration in wage growth. It's hard to fathom that just a few months ago analysts (ourselves included) were decrying its weakness. The path up from its nadir of 0.6% in April has been rocket-like.

The strength in the labor market will not go unnoticed by the Bank of Canada. Risks to the outlook notwithstanding, the broad-based strength in jobs and wage growth suggest that the Bank of Canada should continue to normalize monetary policy. The Bank of Canada may choose to hold off next week, but the next rate hike is likely not more than a few months away.

Author: TD Bank Financial Group Website: http://www.td.com/economics/
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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