CA: Labour Force Survey

Fri May 05 07:30:00 CDT 2017

Consensus Actual Previous
Employment 10,000 3,200 19,400
Unemployment 6.7% 6.5% 6.7%

April employment increased a less than expected 3,200 while the unemployment rate declined 0.2 percentage points to 6.5 percent, the lowest rate since October 2008. Analysts expected a 10,000 job increase and unemployment was expected to remain unchanged. The decrease was mostly the result of fewer youth searching for work. The minimal increase in employment was the result of full time employment declining 31,200 while part time employment increased 34.300. The participation rate declined to 65.6 percent from 65.9 percent in March.

On a sector basis, public employment was up 35,200 while private employment tumbled 50,500. Employment in the goods producing sector was up 4,200, agriculture add 4,300 jobs and natural resources was 1,400 jobs higher. However employment in utilities (down 1,500) and manufacturing (down 600) declined. Services producing jobs were down 1,000 with losses led by business, building & other support services (down 18.700), accommodation & food (down 12,300) and trade (down 8,000).

Employment rose in British Columbia and Prince Edward Island, while it was virtually unchanged in the other provinces.

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.