CA: Labour Force Survey

Fri Feb 09 07:30:00 CST 2018

Consensus Actual Previous
Employment -9,000 -88,000 78,600
Unemployment 5.8% 5.9% 5.7%

January employment dropped a greater than expected 88,000 the largest decline in nine years. Part-time employment declined 137,000 while full-time employment was up 49,000. At the same time, the unemployment rate increased by 0.1 percentage points to 5.9 percent. The participation rate slid from 65.8 percent to 65.5 percent.

Employment declines were spread across a number of industries including educational services, finance, insurance, real estate, rental & leasing, professional, scientific & technical services, construction and health care & social assistance. Employment increased in business, building, & other support services. Private sector employees declined by 71,000 and by 41,000 in the public sector. Self-employment was little changed in January.

The largest employment declines were in Ontario and Quebec. There were also decreases in New Brunswick and Manitoba.

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.