Canada’s Jagged Jobs Edge
Canada’s jagged employment trend has extended its streak for a 10th consecutive month. If you’re keeping score, then you know that means we were due for an upside surprise, after August’s underwhelming performance.
And September’s data didn’t disappoint. According to Statistics Canada (StatCan), the country’s economy added more than 74,000 jobs last month, nearly quadruple economists’ consensus forecast.
That makes September the single strongest month for job creation since May 2013.
Equally important, the unemployment rate dropped by two-tenths of a percentage point, to 6.8 percent, the lowest level since December 2008.
For the sake of comparison, when Canada’s unemployment rate is adjusted by calculating it in accordance with the methodology used by the US Bureau of Labor Statistics, it actually comes in at 5.8 percent, which is a tenth of a point lower than the headline number for the US.
The one unwelcome bit of news is the fact that the labor force participation rate held steady at 66.0 percent, the lowest level since late 2001.
Of particular note, full-time jobs finally drove the headline numbers, after an almost negligible contribution to job growth over the preceding 12-month period.
Full-time positions jumped by more than 69,000, bringing the trailing-year total in this category to around 73,000. In other words, virtually all of the net full-time job creation during this period occurred last month.
By contrast, part-time employment rose by just 4,800. Over the trailing-year period, this category has gained an average of 6,400 jobs per month. Part-time jobs are generally considered to be of lesser quality, owing to lower pay, higher turnover and fewer benefits, hence our focus on full-time job creation.
Over the past 12 months, Canada’s economy has added a net 150,000 jobs, with gains almost evenly divided between part-time jobs and full-time jobs, thanks to September’s sudden surge in the latter category.
However, the public sector was still responsible for a majority of overall employment gains during this period, with slightly more than 88,000 versus 62,000 for the private sector. In percentage terms, the former is up 2.5 percent, while the latter has eked out a gain of just 0.5 percent.
For possible investment themes, we like to look at which industry categories had the strongest job creation on a month-over-month and year-over-year basis.
The natural resources sector, which encompasses forestry, fishing, mining, quarrying, oil and gas, added nearly 28,000 jobs last month, for a sequential gain of 7.9 percent, the strongest growth among the various sectors. Over the trailing year, however, job creation in this category is actually down by 0.1 percent, though the trend has been improving recently.
Given Canada’s high-flying housing market, construction came in second, adding nearly 30,000 jobs in September, for an increase of 2.3 percent. On a year-over-year basis, the number of jobs in this sector has grown by 1.0 percent.
Since part-time jobs drove most of the employment gains up until the latest report, the accommodation and food services industry boasts the strongest record of job creation in the private sector over the past year, with more than 64,000 jobs added during this period, or a gain of 5.7 percent.
The total number of hours worked, which can augur future employment demand, rose 0.3 percent over the past year–nothing to get all that excited about.
But the Bank of Canada’s latest quarterly Business Outlook Survey shows that hiring intentions have increased in all regions and sectors. The percentage of firms polled that expect to boost employment over the next 12 months now stands at 54 percent, an improvement of 11 percentage points from the prior quarter’s survey.
Although Canada’s monthly employment data are notoriously volatile, the central bank’s survey suggests that job gains could continue to pick up in the months ahead.
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