Canadian employment rose faster than economists forecast in August, more than recovering the prior month’s decline, as part-time work increased.
Employment rose by 34,300 following the July decrease of 30,400, Statistics Canada said today in Ottawa, and the jobless rate was unchanged at 7.3 percent. Economists surveyed by Bloomberg News projected a 10,000 gain in jobs and 7.3 percent unemployment, according to median forecasts.
Canada’s jobless rate will remain stalled over the next year, according to economists surveyed by Bloomberg, and Prime Minister Stephen Harper said in an interview with Bloomberg in Vancouver yesterday there will be “sluggish” growth for an extended period in much of the global economy.
“It’s an economy that is growing very slowly and a little bit below potential, not enough to bring down the unemployment rate any further,” said Doug Porter, deputy chief economist at BMO Capital Markets in Toronto.
Part-time positions rose by 46,700 in August, Statistics Canada said today. Full-time employment fell by 12,500 in August, the first decline in seven months.
Canada’s dollar rose to a one-year high today, appreciating 0.5 percent to 97.81 cents per U.S. dollar at 3:11 p.m. in Toronto. It touched 97.66, matching the strongest since Sept. 2, 2011. One Canadian dollar buys $1.0224.
Bonds fell, with the yield on the two-year government benchmark rising 1 basis points to 1.18 percent.
Transportation and warehousing jobs posted the biggest gain by industry with an increase of 37,100 in August. Professional, scientific and technical services rose by 20,000 and business, building and other support services employment increased 19,000.
“We expect near full capacity utilization for the balance of the year,” Algoma Central Corp. Chief Executive Officer Greg Wight said on an Aug. 13 earnings call. The St. Catharines, Ontario-based company owns a fleet of cargo ships that work through the Great Lakes. “This is of course barring any unexpected events that could be disrupted to the North American economy.”
Private companies added 29,900 workers and public-sector employment increased by 17,400 in August. Workers designated by Statistics Canada as employees rose by 47,300 while the self-employed decreased by 13,000.
“I am encouraged by the addition of these jobs,” Finance Minister Jim Flaherty said in an e-mailed statement today. “There are challenges emanating from outside our borders, whether in Europe or the United States, to which Canada is not immune.”
The biggest job loss by industry in August was construction with a drop of 44,000 positions, the most since December 2008, followed by a 17,200 decline for the information, culture and recreation category.
Construction employment remains “vulnerable” to other signs of a slowing housing market, according to Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal. Statistics Canada also said today that building permits fell for the first time in three months in July led by declines in multiple-family housing and institutional buildings.
Average hourly earnings of permanent employees rose 3.7 percent in August from a year earlier, slower than the prior reading of 3.9 percent that was the fastest since April 2009. The Bank of Canada says the figure is a key indicator of inflation.
Two days ago, Bank of Canada Governor Mark Carney left his key interest rate at 1 percent, where it’s been for two years, aiming to encourage investment and consumption that he says will drive growth.
Asked about the report after he gave a speech near Calgary, Carney said “there’s still slack in the labor market,” and said the trend is “broadly positive, but the pace of job creation has slowed.”
“Nobody’s fully satisfied with it,” Carney said, referring to the labor market, “There are still a lot more Canadians who want to work who aren’t working.”
Unemployment has ranged between 7.2 percent and 7.6 percent since March 2012, after falling from a peak of 8.7 percent during the 2009 recession. Joblessness will remain around 7.2 percent over the next year according to a Bloomberg economist survey.
“Canada’s labor market remains in neutral,” Arlene Kish, senior economist at IHS Global Insight in Toronto, wrote in a client note. “Hiring is not expected to be robust without clear signals of a strong pick-up in demand domestically and especially abroad.”
Paper maker Cascades Inc. said Sept. 5 it will close a folding carton plant in Lachute, Quebec, and move the work to other factories. About 40 percent of the 155 employees may be transferred to work at other locations, the Kingsey Falls, Quebec, based company said.
Statistics Canada today also said labor productivity fell 0.4 percent between April and June from the previous quarter, while economists forecast a 0.2 percent decline. The measure of worker output per hour rose by 1 percent from a year earlier. Unit labor costs rose 0.7 percent from the first quarter.
The U.S. today reported that payrolls rose less than economists projected in August and the unemployment rate declined as more Americans left the labor force. The economy added 96,000 workers last month following a revised 141,000 rise in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000. Unemployment unexpectedly fell to 8.1 percent.
“With the disappointment in the U.S. I think the Bank of Canada realistically is just going to be talking about the potential for higher interest rates, and not acting, for some time yet,” said Porter at BMO Capital Markets.