Canada Wages Speed Up as Jobs Gain for Ninth Month

  • Measure of productive capacity reaches highest since 2007
  • Labor market numbers may encourage central bank to keep hiking

Canada’s economy just keeps on producing.

The national statistics agency released figures Friday that showed the labor market is in its longest run of employment gains since the 2008-2009 recession, with signs also emerging that sluggish wages are also on the rise and companies are quickly running out of capacity.

The data could add to expectations the Bank of Canada -- which raised borrowing costs Wednesday -- is poised to continue tightening to prevent the surge in growth from fueling inflation. The Canadian dollar is up a full two-cents since Monday.

Highlights of the Jobs Report

  • The country added 22.2k jobs in August, the ninth straight monthly gain, versus market expectations for a 15k gain
  • Annual average hourly wage gains hit 1.8%, the highest since October 2016
  • The jobless rate fell to 6.2%, the lowest since 2008

Canada’s labor market has been on a tear since the second half of last year, with employment gains rising at the fastest pace in almost a decade. That in turn is boosting incomes and helping fuel a consumption binge that’s made the country’s economy the fastest growing in the Group of Seven.

“One more month, and one step closer towards full employment,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.

Friday’s report will also ease worries -- expressed by the Bank of Canada this week -- about subdued wage gains, which are among the few bits of data left hinting at excess capacity. Average hourly wage gains are still below the average of 2.6 percent since 1998.

Separately, Statistics Canada reported industrial production has reached 85 percent of capacity, the highest 2007.

The report was less positive than the headline number suggests, muting gains Friday in the dollar. The total gain masked a sharp drop in full-time work, which was down by 88,100 in August. Part-time employment was up 110,400.

Self-employed workers were responsible for the full increase in total employment, recording a 32,700 gain during the month. So-called employees recorded a drop of 10,400.

Another negative was that goods-producing industries saw their five-month run of employment gains end, posting a 13,700 drop. That was due to an 11,100 decline for manufacturers.

Canada’s currency was little changed after the report, trading at C$1.2117 against its U.S. counterpart at 8:50 a.m. Toronto time. Yields on government two year bonds climbed 3 basis points to 1.51 percent. 

Still, over the past 12 months, gains have been driven by full-time employment. Since August 2016, Canada has recorded a 374,300 gain in total employment led by a 213,400 gain in full- time workers. Employees accounted for 273,500 of the total gain.

Hours worked were up 2.2%, the biggest gain since August 2015.

— With assistance by Erik Hertzberg

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