- Canadian employment increased by 11,900 in September, in line with market expectations for a 10,000 rise
- Unemployment rate dipped to 6.9% from 7.1% as the labour force shrunk by 25,100
- Gains in services-producing industries more than offset the fall in the goods sector; private sector created all jobs in September
Canada’s labour market geared down in September but didn’t stop creating jobs, with an 11,900 rise in employment reported today. The increase was in line with market expectations that employment grew by 10,000. After bouncing around in July and August, September’s temperate rise showed employers continue to add workers. In the third quarter, employment increased by 32,000 and the unemployment rate averaged 7.1%. Job gains were concentrated in the private sector with self-employment and public sector employment posting declines. Jobs created in September were full-time (+23,400) with part-time employment falling by 11,500. The decrease in part-time employment tempered the 41,800 surge recorded in August. Year to date, employment increased by 113,400 with full-time employment rising 62,100 and part-time up 51,300. The labour force dropped by 25,100 in September, in large part due to a 21,400 decline in youth who were looking for work.
On an industry basis, the services-producing parts of the economy boosted employment by 22,200 with gains in finance, insurance and real estate, retail/wholesale trade and other services more than offsetting declines in health care, public administration, professional services, and food and accommodation services. Goods producers pared back payrolls by 10,300 with losses in construction and manufacturing swamping the 18,900 increase in the primary industries of mining, forestry and fishing.
Job gains were concentrated in youth employment, which increased by 15,700. This was accompanied by a sharp drop in the labour force, resulting in the unemployment rate in this segment falling to 12.9% from 14.1%. Employment was down a slight 3,800 for employees over 25 years of age.
The pace of increase in hourly earnings for permanent employees (the Bank of Canada’s favoured measure) inched up to 1.8% in September from 1.5% in August and 1.3% in July. The average increase in the third quarter was the slowest since the third quarter of 2011. Hours worked eased in September, posting a 0.2% decline. However, this followed strong gains of 0.4% in August and 0.3% increase in July, resulting in the third quarter’s gain accelerating to 1.5% from 0.2% in the second quarter.
On a provincial basis, most saw little change in employment, with the exception of Quebec (+15,000) and Alberta (+4,000). BC recorded the largest monthly loss of 5,400. Alberta’s unemployment rate dropped by 0.5% to 4.3% as the increase in employment was paired with a decline in the labour force. As a result, Alberta now stands with Saskatchewan in having the lowest unemployment rate in the country of 4.3%. Quebec’s unemployment rate fell in September to 7.6% and Statscan indicated that this was partially due to a drop in the number of youths looking for work.
The economy generated 32,000 jobs in the third quarter, a lacklustre performance but strong enough to prevent the unemployment rate from moving higher. The pace was consistent with the economy growing at a below-potential rate in the early part of the year and is likely to pick as growth accelerates. The unemployment rate was 7.1% in the third quarter, in line with its average during the past decade, and indicates that there is still some slack in the labour market. This is also evident in the sluggish pace of wage gains, which slowed to average 1.6% in the third quarter from 2.9% in 2012. Hours worked in the third quarter increased at a 1.5% annualized rate, faster than the second quarter’s 0.2% and in line with our forecast that real GDP expanded at a faster pace than Q2’s 1.7%. In part, this reflects payback from the dampening effect of the Alberta floods and Quebec construction stoppage that occurred late in the second quarter. A bouncebeck was anticipated by the Bank of Canada though recent commentary implied policymakers have lowered the forecast for growth in the second half of this year. This is expected to result in the Bank maintaining its current policy with the overnight rate at a stimulative 1.0% until growth picks up. Only once the economy’s momentum has improved and there is a commensurate firming in labour market conditions will the process of the “normalization of policy interest rates” begin.
RBC