| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Employment - M/M | 8,000 | 5,000 to 20,000 | 150,000 | 104,000 |
| Unemployment Rate | 5.2% | 5.1% to 5.2% | 5.0% | 5.0% |
Highlights
Once again, employment strength surprised on the upside in January, when Canada's economy added another 150,000 jobs, far more than the 8,000 consensus forecast in an Econoday survey. The unemployment rate remained steady at 5.0 percent, below the 5.2 percent consensus, all this with a participation rate that increased to 65.7 percent from 65.4 percent. Total hours worked were little changed on the month.
While the headline number, which coincides with large gains in the US as well, would call for the Bank of Canada to perhaps reconsider its pausing mode earlier rather than later, inflation data were tamer than what could be expected based on the pace of hiring. Average hourly wages rose 4.5 percent year-over-year, down from 4.8 percent in December. In addition, Econoday's consensus divergence index is currently at plus 11 to indicate only a slight outperformance of the economy overall.
The fifth consecutive monthly employment gain, and the largest since February 2022, was led by full-time employment, which was up 121,100, with part-time up 28,900. The private sector was behind most of the strength, with 114,700 positions created, while the public sector added 31,500 jobs. Self-employment was up 3,700 in January.
Both goods-producing industries and services added jobs in January, with gains of 25,400 and 124,700, respectively. Construction was particularly strong, with 15,800 jobs created, more than twice the 7,300 positions added in the manufacturing sector. All main goods-producing industries added jobs on the month, except for a 3,700 drop in agriculture.
Within services, wholesale and retail trade added 58,700 jobs, health care and social assistance 40,000, educational services 18,400 and accommodation and food services 12,400. Overall, gains in 6 of 11 sectors far outpaced declines in other categories, led by a 16,600 decrease in transportation and warehousing.
Regionally, Ontario, Quebec and Alberta led employment gains in January, with increases of 63,000, 47,000 and 21,000, respectively.
While the headline number, which coincides with large gains in the US as well, would call for the Bank of Canada to perhaps reconsider its pausing mode earlier rather than later, inflation data were tamer than what could be expected based on the pace of hiring. Average hourly wages rose 4.5 percent year-over-year, down from 4.8 percent in December. In addition, Econoday's consensus divergence index is currently at plus 11 to indicate only a slight outperformance of the economy overall.
The fifth consecutive monthly employment gain, and the largest since February 2022, was led by full-time employment, which was up 121,100, with part-time up 28,900. The private sector was behind most of the strength, with 114,700 positions created, while the public sector added 31,500 jobs. Self-employment was up 3,700 in January.
Both goods-producing industries and services added jobs in January, with gains of 25,400 and 124,700, respectively. Construction was particularly strong, with 15,800 jobs created, more than twice the 7,300 positions added in the manufacturing sector. All main goods-producing industries added jobs on the month, except for a 3,700 drop in agriculture.
Within services, wholesale and retail trade added 58,700 jobs, health care and social assistance 40,000, educational services 18,400 and accommodation and food services 12,400. Overall, gains in 6 of 11 sectors far outpaced declines in other categories, led by a 16,600 decrease in transportation and warehousing.
Regionally, Ontario, Quebec and Alberta led employment gains in January, with increases of 63,000, 47,000 and 21,000, respectively.
Market Consensus Before Announcement
Employment in January is expected to rise 8,000, correcting lower following December's 104,000 jump. January's unemployment rate is expected to rise 2 tenths 5.2 percent.
Definition
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.
Description
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.
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.
