CA: Labour Force Survey

Fri Dec 01 07:30:00 CST 2017

Consensus Actual Previous
Employment 10,000 79,500 35,000
Unemployment 6.2% 5.9% 6.3%

November employment increased a much greater than anticipated 79,500 while the unemployment rate fell by 0.4 percentage points to 5.9 percent -- the lowest rate since February 2008. Expectations were for a modest 10,000 increase in employment and a 6.2 percent unemployment rate. November saw a gain of 29,600 in full time employment and 49,900 gain in part time employment. The participation rate was unchanged at 65.7 percent. In the 12 months to November, employment was up by 390,000 with all the gains attributable to full-time work (441,000).

Employment gained in wholesale & retail trade, manufacturing, educational services and construction. Employment declined in agriculture. The employment increase was largely among private sector employees, as both public sector employment and the number of self-employed were little changed. Employment was up 37,400 in goods-producing industries. This was led by a 30,400 gain in manufacturing -- the largest increase for this sector since March 2002. Services rose 42,100.

The Bank of Canada will surely pay attention to November's employment growth (and unemployment drop) when it tenders its monetary policy decision on December 6.

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.