Record Gain in Full-Time Work Makes Canada a Jobs MachineBy
Two-month gain of 201k in full-timers is largest on record
Average hourly pay gains hit 2.4%, fastest since April 2016
October was another stellar month of gains for Canada’s labor market, with signs of tightening that included stronger wage increases and the biggest-ever two-month surge in full-time employment.
Jobs increased by 35,300 in October from the previous month, Statistics Canada said Friday from Ottawa, more than double the 15,000 median forecast in a Bloomberg survey of economists.
The data reveal the expected slowing of Canada’s labor market has yet to materialize, potentially casting some questions about whether the Bank of Canada can continue to maintain a wait-and-see strategy toward raising interest rates.
“Growth indicators for Canada have been decelerating, but you wouldn’t know it looking at the labor market, where employers are still beefing up their workforce,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.
The country has now produced job gains for 11 consecutive months -- the longest streak in more than a decade. While there is across-the-board strength, nowhere is it more evident than in the number of full-time jobs being created.
The country added 88,700 full-time jobs in October, and 200,700 over the past two months. That’s the biggest two-month gain in records going back to 1976. Just under 400,000 jobs have been created over the past 12 months, also one of the biggest such gains on record.
The Canadian dollar advanced as much as 0.7 percent to C$1.2768 per U.S. dollar. A recent deterioration of the outlook has fueled a 5 percent drop in the Canadian dollar since early September.
The job gains -- which more than doubled economists’ forecasts -- suggest the economy may be poised to end the year with a bang. Hours worked rose 2.7 percent from a year earlier, the biggest gain since August 2011, while wages are now growing faster than the average since the recession.
The report poses a dilemma for Bank of Canada Governor Stephen Poloz, who has indicated he’ll be cautious on raising interest rates. The gains, particularly faster wage growth, could be signaling even less capacity than thought only a few weeks ago. At the same time, the job gains could bolster his belief that more workers could be drawn into the labor force, allowing the economy to grow longer without fueling inflation.
Employment for youth -- an area that Poloz has given particular emphasis -- increased by 17,500 with the participation rate for that group up by 1 percentage point to 63.7 percent.
A separate trade report Friday was more in line with the current trend of weakening data, as exports continued falling and deficits surpassed C$3 billion for a fourth month. Exports were down 7.9 percent in the third quarter, the biggest quarterly decrease since 2009.
“Overall, while the trade data exposes a weak angle of the Canadian economy, the Labour Force Survey report points to continued gradual tightening in the labor market and supports our call for a more hawkish stance,” TD Securities said in a note.
- The unemployment rate increased to 6.3% from 6.2% -- which was the lowest since 2008 -- as more people entered the labor force.
- The participation rate increased to 65.7%
- Goods-producing industries were behind the gain in October, generating 33.9k jobs versus 1.4k jobs in services
- All the new jobs were in the private sector
— With assistance by Erik Hertzberg