On net, 11.2k more Canadians were at work in October. Fewer of us were looking for work, helping send the unemployment rate a tick lower to 5.8%
Continuing the see-saw pattern of late, full-time employment was in the driver’s seat, with 33.9k net positions added. Part-time work fell 22.6k. The overall gains were driven by the private sector (+20.3k) as public sector employment pulled back (-30.8k), leaving a 21.8k gain in self-employment as the deciding factor.
The gains in employment were concentrated among core-aged (25 to 54) workers, up 31k on net. Those aged 55+ also saw gains (+19k), which means that those aged 15 to 24 saw a sizeable pull-back of 39k.
On an industry basis, the goods sector pulled back (-12.0k), while the service sector added 23.2k, with notable gains in trade (19.2k), business support services (+22k), and healthcare (+15.3k). Only Quebec saw employment gains of note, adding 9.1k as performances were flat in the other provinces.
Aggregate hours worked edged up just slightly (+0.1% month/month, or +0.7% year-on-year). Hourly wages for permanent employees decelerated for a fifth month, gaining just 1.9% year-on-year.
Key Implications
Don’t let the headline drop in unemployment fool you, this was a soft report. The decline in the unemployment rate can be largely put down to fewer Canadians engaging with labour markets, not an encouraging sign. And while the economy managed to add jobs on net, and full-time ones at that, these gains are all due to self-employment – not necessarily a bad thing, but hardly a picture of strength.
If there is a bright spot in the report, it may, oddly enough, be in the noise. The heightened volatility over the summer months may be due to changes in seasonal employment. Youth employment holding back the overall figure for October suggests that this effect may still be in play and so this month’s figures need to be taken with an even larger grain of salt than normal.
In light of communications around last week’s Bank of Canada policy interest rate hike, the wage component was bound to be even more closely watched than usual. In the event, the figures were again disappointing, with wage gains slowing for a fifth straight month. At 1.9% year-on-year, wage growth, at least as measured by this survey, is back below even core inflation.
As discussed in a recent report, income growth will be crucial in enabling households to manage debt loads in a rising rate environment, and by extension a key determinant of the pace of future Bank of Canada interest rate hikes. Past Bank of Canada communications have suggested that today’s report doesn’t carry much weight, with more emphasis placed on less timely (but less volatile) measures, which have so far been holding up well. On balance, today’s data doesn’t help the case for an accelerated pace of tightening, but still leaves January a reasonable target for the next move up.
