| Consensus | Actual | Previous | |
|---|---|---|---|
| Employment - M/M | 15,000 | 17,500 | 63,800 |
| Unemployment Rate | 5.6% | 5.7% | 5.5% |
Highlights
The Canadian economy added 17,500 jobs in October, slightly more than the 15,000 consensus expectation in an Econoday survey. The unemployment rate rose faster than anticipated, reaching 5.7 percent, up from 5.5 percent in the previous month with a stable participation rate at 65.6 percent. The unemployment rate has been on a rising trend since May, and is now at its highest level since January 2022.
The average 12-month hourly wage growth slowed to 4.8 percent in October from 5.0 percent in September. Total hours worked were unchanged on the month and up 2.1 percent year-over-year.
All in all, today's data should comfort the Bank of Canada in its October decision to leave its policy rate unchanged at 5.0 percent. Even though the central bank continues to stress tight conditions and ongoing wage pressures, it pointed out recent job gains have been below labour force growth and job vacancies have continued to ease. In the latest Business Outlook Survey, businesses reported a"widespread easing in the intensity of labour shortages" compared with a year earlier.
The sister survey showed that consumers continue to report a higher-than-normal likelihood of voluntarily leaving their job, with their expectations for wage growth at a survey high. This means the BoC will remain vigilant despite today's reassuring data.
Other details of the report sent evidence of easing conditions, starting with the fact that all gains came from part-time positions, up 20,800, while full-time employment, more reflective of strong conditions, decreased 3,300.
The employment increase was also concentrated in the public sector, which rose 18,900, while the private sector added just 200 positions. Overall, the number of employees increased 19,100, while self-employment was down 1,700.
Looking at the sector breakdown, services added 10,000 jobs and goods-producing industries 7,500 as a result of mixed movements.
Within goods-producing industries, a 23,000 gain in construction offset an 18,800 drop in manufacturing. Within services, information, culture and recreation increased 20,900, followed by gains of 8,900 in health care and social assistance, and 6,000 in public administration. By contrast, wholesale and retail trade fell 21,700, finance, insurance, real estate, rental and leasing was down 8,100, and the accommodation and food services sector shed 5,500 jobs.
With today's report, Econoday's Relative Performance Index, at minus 5 and near the zero line, is consistent with a stable policy stance.
The average 12-month hourly wage growth slowed to 4.8 percent in October from 5.0 percent in September. Total hours worked were unchanged on the month and up 2.1 percent year-over-year.
All in all, today's data should comfort the Bank of Canada in its October decision to leave its policy rate unchanged at 5.0 percent. Even though the central bank continues to stress tight conditions and ongoing wage pressures, it pointed out recent job gains have been below labour force growth and job vacancies have continued to ease. In the latest Business Outlook Survey, businesses reported a"widespread easing in the intensity of labour shortages" compared with a year earlier.
The sister survey showed that consumers continue to report a higher-than-normal likelihood of voluntarily leaving their job, with their expectations for wage growth at a survey high. This means the BoC will remain vigilant despite today's reassuring data.
Other details of the report sent evidence of easing conditions, starting with the fact that all gains came from part-time positions, up 20,800, while full-time employment, more reflective of strong conditions, decreased 3,300.
The employment increase was also concentrated in the public sector, which rose 18,900, while the private sector added just 200 positions. Overall, the number of employees increased 19,100, while self-employment was down 1,700.
Looking at the sector breakdown, services added 10,000 jobs and goods-producing industries 7,500 as a result of mixed movements.
Within goods-producing industries, a 23,000 gain in construction offset an 18,800 drop in manufacturing. Within services, information, culture and recreation increased 20,900, followed by gains of 8,900 in health care and social assistance, and 6,000 in public administration. By contrast, wholesale and retail trade fell 21,700, finance, insurance, real estate, rental and leasing was down 8,100, and the accommodation and food services sector shed 5,500 jobs.
With today's report, Econoday's Relative Performance Index, at minus 5 and near the zero line, is consistent with a stable policy stance.
Market Consensus Before Announcement
Employment in October is expected to rise 15,000 versus September's 63,800 jump that, for the third time in four months, far surpassed expectations. October's unemployment rate is expected to rise 1 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.
