Canada’s economy lost 66k jobs (-0.3% m/m) in August, adding to 41k jobs lost in July. The job losses concentrated in part-time positions (-60k), while full-time employment was little changed.
The unemployment rate rose to a new cycle high of 7.1%. The increase would have been worse were it not for 31k fewer workers in the labour force.
Job losses were seen across several industries. The biggest losses were in professional, scientific and technical services (-26k; -1.3%), transportation and warehousing (-23k; -2.1%), and manufacturing (-19k; -1.0%). However, construction employment bounced back (+17k; +1.1%) from July’s decline (-22k; -1.3%).
Wage growth slowed to 3.2% in August, slightly lower than 3.3% in July.
Key Implications
July and August’s job losses have now more than reversed June’s outsized gain, and the Canadian economy has lost 39k jobs since January. The unemployment rate has risen half a percentage point over the same time period. It could be worse though, a slowdown in labour force growth is keeping the unemployment rate from rising too high, despite weak labour demand.
August’s report is consistent with the Bank of Canada’s characterization of “an excess supply of labour” in July’s Monetary Policy Report. However, it hasn’t yet prompted them to lower rates beyond the pre-emptive cuts made early in the year. Markets are now putting odds on the next cut coming in September. We have long expected two more cuts this year, with the inflation report on September 16th likely to help cement the timing of the next cut.
