August 09, 2019 | 09:06
Cdn. Employment (July 2019) — You're Hot, Then You're Cold
Canadian employment fell 24,200 in July, the third decline in the past five months. The details weren’t any better, as full-time jobs fell 11,600, private sector payrolls were notably soft at down 69,300, total hours worked fell 0.7%, and the jobless rate rose 2 ticks to 5.7%. Of course, all of this must be put in the context that Canadian job figures had been outer-worldly strong up until the past two months—even with the sour July news, jobs are still up 1.9% y/y (U.S. is 1.5%) and the unemployment rate is still down 2 ticks from a year ago. The one counter-trend aspect to today’s result was yet another sprint in wages, as the average hourly measure charged up to 4.5% y/y, the fastest pace in more than a decade. Note that this series is not seen as very reliable by the BoC, and carries only a small weight in the broader measures of wages.
Overall, our grading on the employment report is a “fail” at 27.0, its worst mark since January 2018.
Sector breakdown: The weakest point was retail & wholesale trade (down 20,600), with transportation & warehousing next in line (down 14,800). There were also moderate declines in resources, manufacturing, health, and education, but none of those stood out as especially weak. Construction was about the only source of strength (up 25,000), as it fully reversed weather-related weakness earlier in the year.
Regional breakdown: Three of the big four provinces saw job losses last month, with only Quebec bucking the trend (up 16,600). Notably weak was Alberta—again—at down 14,300, and with a 4-tick rise in its jobless rate to 7.0%. There were a number of wide swings in regional jobless rates, but B.C. still holds down the low point at 4.4%, with Quebec next at 4.9%, while Ontario is right in line with the national average (5.7%).
Bottom Line: The news was almost universally on the soft side in this report, with the ongoing sprint in wages the only outlier. Given the inherent volatility in all aspects of Canadian jobs data, we doubt the Bank of Canada will read too much into the report—neither the recent softness in jobs, nor the strength in wages. Still, the fact that employment is cooling notably after a powerful run, and the jobless rate looks to be edging up again, hands the Bank flexibility to respond if global trade risks mount further and we see more signs of domestic economic weakness.