| Consensus | Consensus Range | Actual | Previous | |
| Employment - M/M | 10,000 | 5,000 to 65,000 | -68,300 | -41,700 |
| Unemployment Rate | 6.5% | 6.4% to 6.5% | 6.5% | 6.4% |
Highlights
Today's employment report, the last before the next monetary policy meeting at the end of October, complicates the case for a Bank of Canada early rate hike in response to elevated inflation. The Canadian economy shed 68,300 jobs in September after 41,700 positions were lost in August. This is far worse than the most pessimistic estimate of a 5,000 increase in an Econoday survey. Beyond the surface, however, job losses were concentrated in the public sector, while employment in the private sector increased.
Overall, the Canadian economy has shed 41,200 jobs year-to-date, including 34,900 in the third quarter, following an increase of 88,300 in the second quarter.
And yet, average hourly wage growth among employees accelerated to 2.3 percent in September from 2.0 percent in August.
The unemployment rate inched up to 6.5 percent from 6.4 percent, as expected, with a participation rate down to 64.8 percent from 65.0 percent the previous month, the lowest level since December 1997, excluding 2020 during the Covid pandemic. Population aging has been pressuring the participation rate down and there is little reason to expect this trend to stop. In September, people aged 65 and older accounted for 23.2 percent of the working-age population (aged 15 and older) in the Labour Force Survey, up from 20.5 percent in September 2019.
The job-finding rate - the proportion of people who were unemployed in August and
had found a job in September - declined to 30.6 percent from 32.8 percent a year earlier, while the layoff rate was little changed at 0.7 percent.
Both full-time and part-time employment declined on the month, led by a 70,000 drop in the public sector, the fourth consecutive monthly decrease, while private-sector employment increased 24,100 in September.
Self-employment decreased 22,500.
The services sector shed 52,300 jobs in September, led by educational services ( down 35,300) and health care and social assistance (down 23,100). Information, culture and recreation lost 11,000 positions, and wholesale and retail trade shed 9,600 jobs. By contrast,"other services" excluding public administration added 17,000 jobs in the month.
Regionally, employment in the province of Quebec fell 49,000, while it increased 23,000 in Alberta.
Employment in goods-producing industries contracted 16,000 in September, most of it in the manufacturing sector (down 12,700).
Market Consensus Before Announcement
The consensus looks for anemic job growth at 10K leading to an uptick in the jobless rate to 6.5 percent from 6.4 percent in August.
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.