| Consensus | Actual | Previous | |
|---|---|---|---|
| Employment - M/M | 15,000 | -2,800 | -1,400 |
| Unemployment Rate | 6.5% | 6.4% | 6.4% |
| Participation Rate | 65.0% | 65.3% |
Highlights
Employment in Canada continued to cool in July with jobs down by 2,800 to miss Econoday's consensus for a 15,000 gain. The unemployment rate held steady at 6.4 percent in July from 6.4 percent in June and up from 6.2 percent in May. Forecasters looked for unemployment to rise to 6.5 percent in July. On a year-over-year basis, the unemployment rate was up by 0.9 percentage points in July.
Underscoring the weakness is another dip in the participation rate to 65.0 percent in July from 65.3 percent in June. The participation rate is now the lowest since June 1998, excluding the recent pandemic period. Lower participation helped keep the unemployment rate from another increase in July.
On the somewhat positive side, total hours worked rose by 1.0 percent in July from June and were up 1.9 percent from a year ago. Average hourly wages cooled a bit to an annual 5.2 percent increase in July from 5.4 percent in June.
The July employment picture reflected an increase of 62,000 in full-time work, offset by a decline of 64,000 in part-time employment. The private sector remained anemic with employment down 42,000 in July after being nearly flat for the prior two months. Private sector jobs are up 0.6 percent or 86,000 from a year ago. Thank goodness for public sector employment, which rose by 41,000 or 0.6 percent in July and up 205,000 or 4.8 percent from a year ago.
By sector, employment in wholesale and retail trade fell 44,000, and finance, insurance and real estate lost 15,000 jobs. Employment rose 20,000 in public administration and gained 15,000 in transportation and warehousing.
Statistics Canada said the actual employment rate in both the United States and Canada has trended down over the past 12 months, but it's been slightly worse in Canada. From July 2023 to July 2024, the employment rate (adjusted to US measurement concepts) fell by 1.0 percentage point to 61.5 percent in Canada, while it declined by 0.4 percentage point to 60.0 percent in the United States.
The soggy employment report is unlikely to alter the sentiment expressed by the Bank of Canada when it announced its recent rate cut. The governing council observed that downside risks have increased and that faster growth may be needed to keep the inflation rate within its target range.
Underscoring the weakness is another dip in the participation rate to 65.0 percent in July from 65.3 percent in June. The participation rate is now the lowest since June 1998, excluding the recent pandemic period. Lower participation helped keep the unemployment rate from another increase in July.
On the somewhat positive side, total hours worked rose by 1.0 percent in July from June and were up 1.9 percent from a year ago. Average hourly wages cooled a bit to an annual 5.2 percent increase in July from 5.4 percent in June.
The July employment picture reflected an increase of 62,000 in full-time work, offset by a decline of 64,000 in part-time employment. The private sector remained anemic with employment down 42,000 in July after being nearly flat for the prior two months. Private sector jobs are up 0.6 percent or 86,000 from a year ago. Thank goodness for public sector employment, which rose by 41,000 or 0.6 percent in July and up 205,000 or 4.8 percent from a year ago.
By sector, employment in wholesale and retail trade fell 44,000, and finance, insurance and real estate lost 15,000 jobs. Employment rose 20,000 in public administration and gained 15,000 in transportation and warehousing.
Statistics Canada said the actual employment rate in both the United States and Canada has trended down over the past 12 months, but it's been slightly worse in Canada. From July 2023 to July 2024, the employment rate (adjusted to US measurement concepts) fell by 1.0 percentage point to 61.5 percent in Canada, while it declined by 0.4 percentage point to 60.0 percent in the United States.
The soggy employment report is unlikely to alter the sentiment expressed by the Bank of Canada when it announced its recent rate cut. The governing council observed that downside risks have increased and that faster growth may be needed to keep the inflation rate within its target range.
Market Consensus Before Announcement
Employment in July is expected to rise 15,000 versus June's flat 1,400 decline. July's unemployment rate is expected to rise to 6.5 percent versus June's 6.4 percent which was noticeably up from May's 6.2 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.
