CA: Labour Force Survey

Fri Oct 06 07:30:00 CDT 2017

Consensus Actual Previous
Employment 15,000 10,000 22,200
Unemployment 6.3% 6.2% 6.2%

September employment was up 10,000 while the unemployment rate remained at 6.2 percent, matching the low of October 2008. Expectations were for an employment gain of 15,000 and an unemployment rate at 6.3 percent. While the overall 10,000 monthly jobs increase was smaller than the 22,200 increase in August, underlying details were stronger and the further wage growth pick up should be welcomed by the Bank of Canada.

Gains in full-time employment (+112,000) were mostly offset by declines in part time (down 102,000). In the 12 months to September, employment rose by 320,000 (+1.8 percent), spurred by gains in full-time employment (+289,000 or +2.0 percent). Over this period, the number of hours worked increased by 2.4 percent.

In the third quarter, overall employment grew by 43,000 (+0.2 percent), slower than the 0.6 percent growth rate in the second quarter and the 0.5 percent growth rate of the first quarter of 2017. For the second consecutive month, Ontario was the lone province with a notable employment gain. There were employment declines in Manitoba and Prince Edward Island.

Employment was higher in educational services as well as wholesale and retail trade, while it fell in information, culture and recreation. The number of people working in educational services increased 20,000, primarily in Ontario and Quebec. Employment in the industry was similar to the level observed in September 2016. Employment in wholesale and retail trade rose by 17,000 in September, bringing gains to 99,000 (+3.6 percent) since September 2016. Employment in information, culture and recreation decreased 24,000 in September. Public sector employment rose 26,000 while the number of private sector employees was little changed. The number of self-employed workers held steady in September.

On the wage front, hourly wages of permanent employees were up 2.2 percent on the year after increasing 1.7 percent in August. Total average weekly wage growth rose an annual 2.2 percent the largest gain since April 2016. Total hours worked rose 2.4 percent on the year.

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.