After a disappointing jobs report for July, Canada’s labor market showed some improvement in August. However, unemployment remains a concern.
On September 9, 2016, Statistics Canada released its labor force survey results for the month of August. It suggests that the Canadian economy added 26,000 jobs for the month. (Source: “Labor Force Survey, August 2016,” Statistics Canada, September 9, 2016.)
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While that headline number looks solid, and is better than economists’ expectation of 16,000 new jobs, note that the unemployment rate ticked up from 6.9% in July to 7.0% in August. Moreover, if you look a bit further back, you’d see a worrying sign; while gaining 113,100 part-time positions in the past 12 months, the Canadian economy has lost 35,700 full-time jobs.
August’s gain in employment was driven by 57,000 jobs added in the public sector. However, it was offset by a 39,100 decline in the number of self-employed workers. Private-sector jobs showed little change.
Region-wise, job gains occurred in Quebec and in Newfoundland and Labrador. Employment declined in New Brunswick. In other provinces, there was little change.
Doug Porter, chief economist at Bank of Montreal (NYSE:BMO), said that the latest jobs report “is really just the mirror image of what we saw last month.” (Source: “Canada’s Unemployment Rate Rises to 7% Despite Strong August Job Growth,” Global News, September 9, 2016.) “If you average those two months out, it shows jobs are pretty much flat which has been the story almost for the last twelve months,” he said. “I think the bigger picture is the economy is struggling to really churn out a meaningful amount of new jobs.”
Andrew Grantham, economist at Canadian Imperial Bank of Commerce (NYSE:CM), had a similar view. He noted that, despite the rebound in August, the six-month average is about 8,000 jobs added per month, which is a rate that is below the 13,000 average monthly job gain in 2015.
“While the gain in headline employment made up for most of the disappointment seen in the prior month, the decline in working hours and the still subdued underlying trend in hiring suggest that the broader trend in the economy remains lackluster,” said Grantham. (Source: Ibid.)
