Wages Accelerate as Canada Adds Jobs for 10th Straight MonthBy and
Average hourly pay gains hit 2.2%, the fastest since 2016
Bank of Canada cited sluggish wage as evidence of slack
Canada’s labor market showed more signs of tightening in September, with the 10th straight month of employment gains and the strongest wage increases in more than a year.
Highlights of Canada’s September Jobs Report
Canada’s labor market has generated the most jobs this year since the country emerged from the last recession. Robust employment is boosting incomes and helping fuel a consumption binge that’s made the country’s economy the fastest growing in the Group of Seven.
Friday’s report will strengthen the Bank of Canada’s confidence the economy is quickly running up against capacity, validating the two interest-rate increases earlier this year. The pick-up in wage gains boosted odds of another rate increase this year. Policy makers had cited sluggish pay hikes as an indication slack remained in the labor market.
On the flip side, employment gains are slowing, in line with an expected second-half cooling in the economy. Employment gains have averaged about 14,000 over the past three months, less than half the pace of earlier this year.
The Canadian dollar was little changed after the report, trading at C$1.256 per U.S. dollar at 9:09 a.m. in Toronto. Swaps trading suggest investors increased bets on a rate increase in October, with chances of a hike placed at 26 percent. That’s up from 19 percent yesterday. The yield on Canada government two-year bonds rose 2 basis points to 1.54 percent.
Avery Shenfeld, CIBC Economics: “Overall, the 10K pace is about what we would expect as a trend if GDP growth is tailing off to the 2% range in the second half of the year, enough of a slowdown to keep the Bank of Canada on hold until 2018.”
Doug Porter, Bank of Montreal: “Make no mistake, this is a strong report despite the somewhat sub-par headline job gain.” “While taken alone, it will do little to spur the Bank of Canada, it definitely keeps the rate-hike cycle on track.”
- Hours worked are up 2.4 percent from a year earlier, the biggest annual increase since June 2012
- Unemployment rate was unchanged at 6.2 percent, the lowest since October 2008
- The large jump in full-time jobs in September offset a big decline in August, suggesting some seasonality effects in the data. On a net basis, full-time jobs are up about 24,000 over two months. A similar trend exists in the part-time numbers
- Total employment is up by about 320,000 over the past 12 months, driven by 289,000 new full-time jobs
- The public sector was the main contributor of employment growth in September, generating 26,200 new jobs. The private sector declined 15,500
- Youth unemployment fell to 10.3 percent, the lowest on record, as their participation rate dropped. That reflected an increase in the full-time school attendance rate to the highest since 2011
- Ontario led gainers, with an employment increase of 34,700 during the month