September 10, 2021 | 09:21
Canadian Employment (Aug.) — Still Riding the Reopening Wave
Canadian employment rose 90,200 in August, a bit stronger than generally expected and only a small step down from the prior month's gain. Most of the details of the report were positive, with the job gains led by full-time (+68,500) and/or private sector (76,700) positions. And, the unemployment rate dropped by a heavy 4 ticks to 7.1%, although that was somewhat flattered by a small dip in the participation rate. The one dull note was sounded by total hours worked, which nudged up just 0.1% m/m. However, strong gains early in the quarter have "built in" a solid 5% annualized rise for Q3, suggesting GDP will recover from the 1.1% pullback in Q2. Finally, average hourly wages posted a decent monthly gain but are now up just 1.3% y/y; this figure has been heavily distorted by shifts among sectors and the two-year trend of 3.8% is more meaningful.
By sector, the big driver of the gain was hotels & restaurants (+74,600), reflecting a more complete re-opening, and a stark difference with the U.S. (where such jobs stalled last month: see chart below). Information, culture & recreation rose a hearty 23,900, another sector that would have benefited from reopening. Services overall accounted for all of the net job gains, with a further assist from a 13,900 rise in public administration. (The election was called the week of the survey, and some related hiring could have swelled the numbers somewhat.) On the goods producing side, only construction (+20k) was in the black, as manufacturing dipped 6,300.
By region, the biggest gains were in Ontario (53,000), which more fully reopened in the month. Still, fully 7 provinces posted gains, with each of the three westernmost seeing double-digit increases.
Bottom Line: Overall, a solid report which will act as a bit of an antidote to last week's sour GDP result. On balance, the continued decent gains in employment suggest that the recovery was still grinding forward in late summer even in the face of the budding fourth wave and ongoing supply bottlenecks. Employment is now just 0.8% away from returning to pre-pandemic levels, and the 7.1% unemployment rate is now precisely in line with its 20-year average. For the Bank of Canada, these two facts suggest that it's entirely appropriate to keep pressing ahead with the tapering timeline.