Canadian Job Creation Triples Forecasts in August
Canadian employment rose faster than economists forecast in August, gaining for the first time in three months led by part-time work and service industries.
Employment increased by 59,200 and the jobless rate fell to 7.1 percent from 7.2 percent, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News projected a 20,000 job increase and an unchanged jobless rate, according to the median forecasts.
Canada’s dollar jumped as the gain contrasted with a U.S. report that showed payrolls rose by less than was forecast. Even with the jobs increase, Canada’s labor market remains on pace for the slowest advance in employment since 2001 outside of the last recession.
“I don’t think this is a signal there is a lot of positive momentum for the Canadian economy,” Sonya Gulati, senior economist at Toronto-Dominion Bank, said of the jobs report. “The employment growth that we are getting just isn’t consistent enough to make some headway in lowering the unemployment rate.”
The U.S. reported today its jobless rate fell to 7.3 percent last month as people dropped out of the labor force and payrolls expanded by a less-than-expected 169,000.
The Canadian dollar rose 1.1 percent to C$1.0388 per U.S. dollar at 11:55 a.m. in Toronto. One dollar buys 96.26 U.S. cents. Government bonds rose, with the yield on the benchmark five-year note falling by 5 basis points to 2.11 percent.
Part-time employment in Canada rose by 41,800 in August, with full-time jobs rising by 17,400, Statistics Canada said. Service industry employment increased by 40,600 and goods-producing companies hired 18,600.
Canada has added 38,400 full-time jobs so far this year, the second-least in that period since 1995.
Health care and social assistance employment rose by 59,500 in August, followed by a 33,200 gain for information, culture and recreation workers. Accommodation and food service employment advanced 25,500 and construction climbed 17,700, according to the report.
The job surge follows an Aug. 30 report that showed economic growth slowed to a 1.7 percent annualized pace in the second quarter. The Bank of Canada kept its policy rate at 1 percent on Sept. 4, where it’s been for three years.
Job gains have averaged 12,700 this year, compared with 25,900 in 2012. The world’s 11th largest economy needs to add more than 22,000 jobs a month for the rest of 2013 to avoid suffering the weakest annual gain since 2001, except for the recession years of 2008-2009.
“What’s perhaps more important for the market today is the very marked divergence with the U.S.,” said Doug Porter, chief economist at BMO Capital Markets in Toronto. “While you can punch some holes in the Canadian report, it’s still impressive overall.”
Unemployment has stayed between 7 percent and 7.5 percent since May 2011, after it dropped from a peak of 8.7 percent in August 2009. The jobless rate will average 7 percent or more through the first quarter of next year, according to a Bloomberg economist forecast.
Education workers fell by 22,400 to lead declining industries in August. The finance, insurance, real estate and leasing group cut 18,500 jobs and public administration work fell by 6,700 positions, Statistics Canada said.
Private companies added 30,900 workers in August, and public-sector employment advanced 9,000. Workers designated by Statistics Canada as employees rose by 39,900. The self-employed category increased by 19,200.
The figures “confirm a tendency that has been ongoing for some time and that has been the steady growth of jobs in Canada,” Prime Minister Stephen Harper said at a press conference today shown on CTV News at a meeting of leaders from the Group of 20 nations in St. Petersburg, Russia.
Average hourly wages of permanent employees rose 1.55 percent in August from a year earlier, exceeding the prior reading of 1.35 percent.
In a separate report, Statistics Canada today said that the nation’s labor productivity rose 0.5 percent in the second quarter. From a year earlier, productivity rose 0.1 percent.