• Employment fell 71k in November
  • The unemployment rate jumped to 5.9% from 5.5%
  • Wage growth remained solid at 4 1/2%

A long string of earlier improvements in the normally highly volatile Canadian labour market data meant we were likely due for a significant downside surprise at some point – but the softening in November is nonetheless eye-catching. Employment is still up (a likely above-trend) 26k per month in 2019 to-date given earlier gains, and with most of that coming from full-time work. And part of the 71k drop in November was due to a retracement of a public administration jobs boost in October that was probably related to the federal election that month. But the normally less-volatile unemployment rate surged up to 5.9% from 5.5% in October. That level is still low, but the 0.4 percentage point increase is the largest since early 2009. And manufacturing jobs are down more than 50k over the last two months combined.

The silver lining is that wage growth ticked modestly higher, to 4.5% from 4.3% in October. So overall labour income growth still looks relatively solid despite slower job growth. But wages also tend to lag the labour market cycle. To be clear, the monthly employment data is highly volatile so it will take more reports like this one to really change the narrative that Canadian labour markets have been looking relatively resilient. And a much stronger November employment report out of the US could calm some concerns about go-forward external demand for Canada. But, at the least, today’s data mean the Bank of Canada and others will be watching the next several months of data just that much more closely for confirmation that is indeed the case.

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