| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Employment - M/M | 10,000 | 5,000 to 30,000 | -65,500 | -40,800 |
| Unemployment Rate | 7.0% | 6.9% to 7.0% | 7.1% | 6.9% |
| Participation Rate | 65.1% | 65.2% |
Highlights
The Canadian labor market is losing more steam than expected, with 65,500 jobs lost in August, while forecasters in an Econoday survey had expected gains ranging from 5,000 to 30,000. The unemployment rate rose to 7.1 percent from 6.9 percent, above the 7.0 percent consensus, reaching its highest level since May 2016 (excluding 2020 and 2021 pandemic years). The participation rate was down to 65.1 percent from 65.2 percent.
While the employment decline was led by part-time work, down 59,700, full-time employment decreased 6,000.
Hours worked edged up 0.1 percent. Wage growth slowed to up to 3.2 percent year-over-year from 3.3 percent in in July (unadjusted).
The private sector shed 7,500 jobs on the month and the public sector cut 15,500 positions. Self-employment plunged 42,600.
Today's report comes on the back of a 40,800 drop in employment in July led by full-time employment, after the economy contracted at an annualized rate of 1.6 percent in the second quarter. Together, these developments could convince the Bank of Canada to cut rates at its September meeting, especially with pressure mounting on its U.S. counterpart to do so. More importantly, the BoC said in its minutes of the July 30 meeting that some members of the Governing Council were in favor of cutting interest rates in light of the softening labor market conditions, which today's report confirmed. They highlighted that further monetary policy support would likely be needed given the estimated amount and persistence of slack in the economy, particularly if the labour market softened further.
Job losses were concentrated in services, down 67,200, while employment increased 1,700 in goods-producing industries. A 19,200 drop in manufacturing was offset by gains of 17,100 in construction, 4,700 in utilities and 4,800 in agriculture. The natural resources sector shed 5,600 jobs on the month.
In services, job losses were concentrated in three sectors, together cutting 67,200 positions: Professional, scientific and technical services were down 26,100; transportation and warehousing down 22,700; and educational services down 18,400. The largest gain was in accommodation and food services, which added 9,200 jobs.
While the employment decline was led by part-time work, down 59,700, full-time employment decreased 6,000.
Hours worked edged up 0.1 percent. Wage growth slowed to up to 3.2 percent year-over-year from 3.3 percent in in July (unadjusted).
The private sector shed 7,500 jobs on the month and the public sector cut 15,500 positions. Self-employment plunged 42,600.
Today's report comes on the back of a 40,800 drop in employment in July led by full-time employment, after the economy contracted at an annualized rate of 1.6 percent in the second quarter. Together, these developments could convince the Bank of Canada to cut rates at its September meeting, especially with pressure mounting on its U.S. counterpart to do so. More importantly, the BoC said in its minutes of the July 30 meeting that some members of the Governing Council were in favor of cutting interest rates in light of the softening labor market conditions, which today's report confirmed. They highlighted that further monetary policy support would likely be needed given the estimated amount and persistence of slack in the economy, particularly if the labour market softened further.
Job losses were concentrated in services, down 67,200, while employment increased 1,700 in goods-producing industries. A 19,200 drop in manufacturing was offset by gains of 17,100 in construction, 4,700 in utilities and 4,800 in agriculture. The natural resources sector shed 5,600 jobs on the month.
In services, job losses were concentrated in three sectors, together cutting 67,200 positions: Professional, scientific and technical services were down 26,100; transportation and warehousing down 22,700; and educational services down 18,400. The largest gain was in accommodation and food services, which added 9,200 jobs.
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.
