Canada: Weak job gains in 2018 but labour market remains tight - NBF

According to National Bank of Canada’s analysts, Matthieu Arseneau, the Canadian labor market data shows private jobs still struggling during 2018, despite the rebound seen in September. 

Key Quotes:

“Canadian employment surged 63K in September according to the Labour Force Survey, above consensus which was looking for a 25K print. The unemployment rate dropped one tick to 5.9%. Private sector employment rose massively by 96K while public sector jobs remained essentially unchanged and self-employed dropped by 35K.

“Full time employment was down 17K but that was more than offset by the huge 80K gain in part-time positions. Hourly earnings were up 2.4% year-on-year, dropping from 2.9% the prior month.”

“The Canadian jobs report for September was reassuring following August’s huge drop. We are particularly pleased to see private employment bouncing back sharply after struggling for most of the year. True, full-time job creation disappointed in September but they are still up a decent 80K on a year to-date basis vs. a drop of 32K for parttime jobs.”

“We do not think that the central bank is giving significant attention to the LFS soft patch. The Survey of Employment, Payrolls and Hours (SEPH), a survey of establishments is showing a much better picture in 2018 (+202K for the 7 first months of the year vs. 74K for a comparable gauge based on the LFS).”

“We continue to expect the Bank of Canada to resume monetary policy tightening on October 24 in a context where it is hard to justify keeping interest rates below inflation now that uncertainty surrounding US-Canada trade has dissipated.”