| Consensus | Actual | Previous | |
|---|---|---|---|
| Employment - M/M | 20,000 | 63,800 | 39,900 |
| Unemployment Rate | 5.6% | 5.5% | 5.5% |
Highlights
Another big surprise. Employment surged 63,800 in September, three times as much as expected, after the economy added nearly 40,000 jobs in August. The unemployment rate remained steady at 5.5 percent, tighter than the 5.6 percent consensus with the participation rate edging up to 65.6 percent from 65.5 percent. Year-over-year wage growth picked up to 5.0 percent from 4.9 percent, none of it reassuring for the Bank of Canada.
Yet the breakdown reflects a situation that is not as strong as the headline indicates which, however, should bring little comfort to the central bank as it assesses the outlook on wages. Employment gains were led by a 47,900 increase in part-time jobs, while full-time was up 15,800. The number of employees rose 37,800, but nearly all of it was in the public sector, which added 36,600 positions. Self-employment, not as reflective of a healthy job market as full-time employees, continued to increase with a 26,100 advance over the month.
Total hours worked were virtually unchanged on the month, while they were up 2.6 percent from a year earlier.
Looking at the sector breakdown, goods-producing industries shed 10,500 jobs in September, led by a 17,500 drop in construction only partly offset by an 8,800 increase in manufacturing.
The services sector, by contrast, added 74,300 positions led by a 65,800 surge in educational services, an 18,900 increase in transportation and an 11,000 rise in accommodation and food services, together totalling 95,700 jobs. Three service sectors posted declines on the month totalling 42,600: finance, insurance, real estate, rental and leasing lost 19,800 jobs; information, culture and recreation was down 12,100; and wholesale and retail trade fell 10,700. All other services recorded gains.
Employment was up 139,700 over the third quarter, following a 142,700 increase in the second quarter.
With today's report, Econoday's Relative Performance Index is at 47, consistent with an economy that is performing appreciably stronger than expected, adding to the BoC tightening risk.
Yet the breakdown reflects a situation that is not as strong as the headline indicates which, however, should bring little comfort to the central bank as it assesses the outlook on wages. Employment gains were led by a 47,900 increase in part-time jobs, while full-time was up 15,800. The number of employees rose 37,800, but nearly all of it was in the public sector, which added 36,600 positions. Self-employment, not as reflective of a healthy job market as full-time employees, continued to increase with a 26,100 advance over the month.
Total hours worked were virtually unchanged on the month, while they were up 2.6 percent from a year earlier.
Looking at the sector breakdown, goods-producing industries shed 10,500 jobs in September, led by a 17,500 drop in construction only partly offset by an 8,800 increase in manufacturing.
The services sector, by contrast, added 74,300 positions led by a 65,800 surge in educational services, an 18,900 increase in transportation and an 11,000 rise in accommodation and food services, together totalling 95,700 jobs. Three service sectors posted declines on the month totalling 42,600: finance, insurance, real estate, rental and leasing lost 19,800 jobs; information, culture and recreation was down 12,100; and wholesale and retail trade fell 10,700. All other services recorded gains.
Employment was up 139,700 over the third quarter, following a 142,700 increase in the second quarter.
With today's report, Econoday's Relative Performance Index is at 47, consistent with an economy that is performing appreciably stronger than expected, adding to the BoC tightening risk.
Market Consensus Before Announcement
Employment in September is expected to rise 20,000 versus August's 39.900 jump that, for the second time in three months, far surpassed expectations. September's unemployment rate is expected to rise a tenth to 5.6 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.
