Employment soared 107,000 in September, which was well above an expected rise of 10,000. However, the unemployment rate remained unchanged at 6.1%. The increase in jobs was largely a reflection of the 97,000 jump in part-time employment with full-time jobs up a much more modest 10,000.
Canadian Employment Soars
Employment soared 107,000 in September, which was well above an expected rise of 10,000. However, the unemployment rate remained unchanged at 6.1%. The increase in jobs was largely a reflection of the 97,000 jump in part-time employment with full-time jobs up a much more modest 10,000.
The labour force numbers showed unexpected weakness in July with part-time employment plummeting 48,000. This may have been the result of weak hiring of part-time workers for the summer months. Thus, September's strength may simply reflect fewer layoffs compared to previous years that, when seasonally adjusted, contributed to the spike reported this morning. However, it is unlikely that this factor can explain away all of the strength.
The rise in employment was relatively broadly based, with goods-producing industries up 46,000 and service-producing industries up 61,000. Within the former, manufacturing rose 20,000 while construction was up 14,000. The gain in services was led by health care (+40,000), business building and support services (+20,000) and other services (+17,000). The strength in the latter may have in part been related to hiring for the federal election, which was called September 7.
Strength in labour markets was also conveyed by the key wage measure in the report, average hourly wages for permanent workers, which rose to 4.3% from 3.3% in August. This is still down from a recent peak at the start of the year of 4.9%.
This robust hiring is encouraging in the face of the rising credit tightening playing out in financial markets globally. However, our view is that the pressures from financial markets will start to have a more dampening impact on the Canadian economy and labour markets going forward, both directly and via a weakening U.S. economy that has likely gone into recession.
Although the Bank of Canada will take some encouragement from these numbers, it will remain wary about the growing downside risks to growth coming from credit markets. We expect that this will contribute to the Bank of Canada maintaining the overnight rate at its current, and still stimulative, 2.50% in the near-term.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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