CA: Labour Force Survey

Fri Nov 03 07:30:00 CDT 2017

Consensus Actual Previous
Employment 15,000 35,000 10,000
Unemployment 6.2% 6.3% 6.2%

Canadian labour market added a better-than-expected net 35,000 jobs in October easily topping expectations of 15,000 jobs. It was the best month for jobs growth since June. The unemployment rate ticked up to 6.3 percent, from 6.2 percent. The participation rate edged up to 65.7 percent from 65.6 percent in September.

The employment figures should offer some reassurance to policymakers over the country's third-quarter performance. While the economy is widely expected to slow after growing by an impressive 4.5 percent annualized rate in the second quarter, the pickup in hiring should ease some concern of a dramatic slowdown.

Full-time employment was up 88,700 after surging 112,000 in September. Part-time employment, however, contracted a further 53,400 after declining 10,200 in September. Year-to-date total added 264,400 jobs. Full-time was up 340,900 and part-time down 76,600. New positions were concentrated in the private sector, where employment rose 39,100 after declining 15,500 in September while public sector jobs were down 4,500 over the month.

On a sector basis, gains in October were led by goods-producing industries while services lagged.

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.