- Canada lost half of the prior month’s employment surge
- This was a summer jobs report that masked underlying resilience
- Wages ripped higher
- Nothing hangs on this one set of numbers from a BoC perspective
- Canada jobs m/m 000s / UR %, July, SA:
- Actual: -40.8 / 6.9
- Scotia: 20 / 6.9
- Consensus: 10 / 7.0
- Prior: 83.1 / 6.9
Canada lost 41k jobs in July with somewhat mixed details. What follows are light observations while on vacay. Summary data is provided in chart 1.
Nothing hangs on just this one report. It comes on the heels of an 83k gain in June and with 103k jobs created so far this year. Smooth the noisy household survey.
Further, this is one of two job reports before the next BoC decision on September 17th, along with a bevy of other macro indicators (CPI, GDP etc) and potential developments around trade and fiscal policies.
It’s probably because of these points that market moves were minor following the release. There is only about 10bps priced in for the BoC September meeting.
The loss would have been greater if not for the highest seasonal adjustment factor on record comparing like months of July (chart 2). The recency bias in how they are calculated is creating what I believe to be unreliable adjustments.
All of the loss was in full-time jobs (-51k) as part-time jobs were up 10.3k.
Almost all of the loss was among youths aged 15–24 who saw 34k fewer jobs in July (chart 3). Adults aged 25+ lost 7k after gaining 74k the prior month. This is an important point as the 25+ market is more likely to be floating the economy. A flood of temps changed the summer job market and wildfires haven’t helped seasonal employment.
Almost all of the loss was in private payroll positions (-39k) as public payrolls (+4k) and self-employed positions (-6k) were little changed.
The loss had high sector breadth (chart 4). The goods sector lost 29k jobs and services were down 12k. Within goods, construction (-22k) and agriculture (-11k) were the culprits. Within services, the biggest losses were in info/culture/rec (-29k), health care and social assistance (-17k) and business, building and other support services (-19k).
Wage growth vaulted forward with a rise of 8.1% m/m at a seasonally adjusted and annualized rate (SAAR). That’s the strongest since last October (chart 5).
Hours worked slipped by -0.2% m/m SA. They are tracking a mild 0.5% q/q SAAR gain in Q3 so far assuming August and September come in flat only to focus the math on the effects of what is known thus far (chart 6).
The unemployment rate held at 6.9% because the labour force shrank by 33k and knocked the participation rate down two-tenths to 65.2% (chart 7). The labour force is a super volatile series and follows three large monthly gains. The surprise to me has been that the labour force has not been shrinking by more due to tighter immigration policies.
By province the biggest losers were Alberta, BC and Quebec, all down by 15–17k.
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