October 08, 2021 | 09:29
Canadian Jobs: She-Covery!
Canadian employment rose by a hearty 157,100 in September versus expectations of a 60,000 gain and a 90,200 advance in the prior month. The robust reading pulled total employment just above the pre-pandemic high, marking a watershed moment in the recovery—the economy has now recouped the entire 3 million jobs lost in the spring of 2020. The recovery, while clearly bumpy at times, took a mere 17 months, which frankly was undoubtedly much faster than almost anyone would have dared predict in those dark days. As a side note, female employment led the way last month with a huge 99,700 jump, and is now well above pre-pandemic levels (whereas employment for males is not quite back to those levels yet). There is, no doubt, still work to do, as the jobless rate dipped 0.2 ppt to 6.9%, but remains well above the pre-pandemic trend of around 5.7%. Note that the drop in joblessness is real, as the participation rate also returned all the way back to pre-pandemic levels last month (up 4 ticks to 65.5%).
If anything, the details in the report were even stronger than the headline. Yes, the overall tally was somewhat flattered by a 37k rise in public administration jobs (wind aided by the election, arguably literally). But there were no fewer than six sectors which reported gains of 20k or more. As well, fully nine provinces posted gains, so the advance was broadly based. Moreover, full-time jobs accounted for all of the gains (up 194k), while both private and public payrolls were strong (self-employment dipped 19k). Total hours worked rose a solid 1.1% m/m, and were up at a strong 6.8% a.r. for all of Q3, pointing to some upside risk to our GDP call of 3.5% for the quarter. Finally, wages nudged up 1.7% y/y, although StatCan helpfully points out that adjusted for shifting industry mix, wages are now up 4.6% from two years ago. That translates to a 2.3% annualized rise in wages during the pandemic, probably more reflective of the true underlying trend.
By industry: Beyond the election boost to public admin jobs, other areas of strength included culture & recreation, professional & tech, finance & real estate, manufacturing and education. In a nutshell, that's a diverse group, suggesting broad-based strength. On the flip side, the notable clunker last month was the beleaguered hotel & restaurant sector (down 26.7k), suggesting the September bounce was not a pure re-opening play.
By region: Ontario accounted for almost half the gains (up 73.6k), but all four of the big provinces posted double-digit gains—even Alberta (+19.6k), even as it faced some new restrictions. Only Newfoundland failed to join in the jobs revival in the month.
Bottom Line: There are few blemishes on this report, which importantly marks the recovery of the pandemic job losses. However, total hours worked are still 1.5% below prior highs, and the jobless rate at 6.9% is still more than 1 ppt above the prior lows, so there's still wood to chop before we have a complete employment recovery. Still, this strong result all but locks in a further tapering by the BoC at the meeting later this month (Oct 27), and bumps up the risks of the first rate hike arriving earlier than our call of next October. The fast recovery in Canadian job tallies is a very different picture than stateside, as U.S. payrolls are still down more than 3% from Feb/20 levels with today's sluggish result.