CA: Labour Force Survey

Fri Jan 05 07:30:00 CST 2018

Consensus Actual Previous
Employment -10,000 78,600 79,500
Unemployment 6.0% 5.7% 5.9%

December employment jumped 78,600 after increasing 79,500 in November - far above expectations. For the year 2017 employment was up 422,500 for the largest expansion since 2002 with most of the gains in full time employment. At the same time, the unemployment rate declined from 5.9 percent to 5.7 percent the lowest since January 1976. The participation rate climbed to 65.8 percent from 65.7 percent. The employment increase in December was concentrated in part-time jobs which were up 55,000. With a Bank of Canada policy meeting looming on January 17, the strength in the labour force will certainly be a consideration for policy going forward.

The largest employment gains in December were in Quebec and Alberta, while there were smaller increases in Nova Scotia, Saskatchewan, New Brunswick and Prince Edward Island.

In December, 25,000 more people were employed in finance, insurance, real estate, rental and leasing following three months of little change. Employment was up by 13,000 in the "other services" industry. "Other services" include services such as those related to civic and professional organizations and personal and laundry services. In educational services, employment rose by 11,000 in December, a second consecutive monthly increase. The number of self-employed workers increased 28,000. At the same time, public sector employment rose by 22,000, while the number of private sector employees was stable.

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.