CA: Labour Force Survey


Fri Jan 09 07:30:00 CST 2015

Consensus Actual Previous
Employment 10,000 -4,300 -10,700
Unemployment 6.6% 6.6% 6.6%

Highlights
The labour market proved weaker than expected last month. Headline employment surprisingly fell 4,300 and so compounded the 10,700 decline recorded in November. Meantime, with the participation rate down a tick at 65.9 percent, the jobless rate held steady at 6.6 percent, in line with the market consensus.

However, the decline in overall jobs was misleading as, with an increase of some 53,500, full-time positions posted a more than solid increase. Part-time jobs were down fully 57,700. Net hiring in the private sector edged up 5,100 while the public sector expanded a marginally stronger 5,500. The number of self-employed was down 14,900.

Indeed, the goods producing sector enjoyed a favourable month with its payroll rising 22,100. That said, within this manufacturing dropped 18,300. Construction gained 12,600, agriculture was up 14,700, and natural resources advanced 10,200. Utilities added 2,800.

Meanwhile, services underperformed with a decline of 26,400 dominated by a 32,800 slump in accommodation and food. The slide here was exacerbated by additional decreases in other services (13,500) and professional, scientific and technical services (13,200). Even so, there was better news elsewhere as trade grew 10,500 and transportation and warehousing 11,500.

December's labour market report puts the fourth quarter rise in employment at only 28,100, sharply down from 74,100 in the July-September period and consistent with an expected slowdown in real GDP growth. The economy seems to have ended 2014 on a somewhat sluggish note and, despite the jump in full-time employment, there is nothing here to make the BoC any less dovish.

Definition
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

Description
As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.