September 08, 2023 | 09:15
Pop(ulation) Goes the Job Growth
Canadian employment was solid in August, with headline jobs rising by an above-trend 39,900, mostly in full-time positions, lifting total hours worked by a sturdy 0.5% in the month. While the working age population continues to thunder ahead—rising by just over 100,000 in August alone, and 800,000 in the past year—the job growth was just enough to hold the unemployment rate steady at 5.5%, as expected. Still, the jobless rate is up half a point from the lows earlier this year, a clear warning signal for the economy. StatCan highlights that the job-changing rate was 0.4% last month, half the peak in early 2022, when job vacancies were also peaking, and below the pre-COVID trend of 0.7%. (The rate measures the share of the workforce that switches jobs in a month, staying employed for the duration.) The slightly less-tight job market is chipping away at wage pressures, although average hourly wages were still near the high end of the BoC's dis-comfort range at 4.9% y/y (5.0% in July).
One slight caveat to the otherwise solid report was that all of the job gains were in self-employment (+49,500), while payrolls dipped 9,500. However, this runs counter to the trend of the past year, as self-employment has scratched out only a small rise from a year ago.
By sector: The two biggest drivers of the gains were professional & tech jobs at +52k, and construction at +34k. The latter has been notably soft prior to the August bounce, and is still up a modest 0.8% y/y (versus a 2.5% y/y rise for total employment). On the soft side, manufacturing fell by a hefty 30k, while education—which is always quirky around this time of year—dropped an even heavier 44k. Even with that fall, the latter group has still seen a solid 2.6% rise in the past year.
By region: Alberta, Quebec and B.C. all saw double-digit gains, accounting for the bulk of the advance, while Ontario and Nova Scotia were the only provinces to report moderate declines in jobs. While provincial jobless rates shuffled around, the big story is that Quebec's rate fell another 2 ticks to 4.3%, and is by far the lowest in the country (B.C. is now next at 5.2%). West of Quebec, all five provinces are in the 5s, while the Maritimes are all in the 7s, and Newfoundland is the high at 8.9%.
Bottom Line: Canada's job market has been following a sawtooth pattern this year, with a soft report generally followed by a snapback, and this was the month for a minor snapback. While August was for the most part a respectable month, it's worth pounding home the point that Canada now needs a steady flow of jobs just to match raging population growth—StatCan says about 50,000 jobs are needed a month to hold the unemployment rate steady. Thus, it's not inconsistent to see a sturdy monthly gain of 40,000 jobs and still conclude that the market is slightly easing. For the Bank of Canada, this report therefore likely doesn't move the needle much—it's not strong enough to prompt an immediate rethink on the pause, but it's also certainly not soft enough to rule out further hikes. The next decision will largely hinge on how the CPI fares in the next two readings.