CA: Labour Force Survey

Fri Jun 05 07:30:00 CDT 2015

Consensus Actual Previous
Employment 10.000 58,900 -19,700
Unemployment 6.8% 6.8% 6.8%

Having fallen surprisingly steeply in April employment returned to strong positive monthly growth in May. A 58,900 surge was well above expectations but with the participation rate edging a tick higher to 65.9 percent, only sufficient to leave the jobless rate unchanged at 6.8 percent.

May's rise in employment was biased towards full-time jobs which were up 30,900. Nonetheless, part-time also fared well, rising some 27,900. Significantly too, private sector payrolls climbed fully 56,800 while the public sector shed a net 19,100 and the number of self-employed gained 21,100.

Goods producing industries posted a 10,200 advance within which manufacturing increased a tidy 21,500. Utilities were up 2,400 but there were small falls in construction (4,700), natural resources (2,400) and agriculture (6,600).

Meantime, services recorded a very solid 48,600 increase, largely thanks to a 20,700 jump in health care and social assistance. Other sizeable rises were registered in trade (16,800), finance, insurance, real estate and leasing (12,700) and business, building and other support services (12,900). The only decline of any real note was in public administration (12,000)

Today's report extends the switchback profile to the monthly employment data that began late last year and so may not say too much about underlying trends. However, the average rise in employment in April/May was 19,600, down marginally from a mean 21,000 increase in the first quarter when real GDP dipped 0.1 percent versus October-December. This hardly points to a sharp rebound in total output this quarter. That said, other indicators have been rather more positive about economic developments and the BoC's current 1.8 percent (saar) forecast should be readily attainable.

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.

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.