Economics
Canada's jobs market stalls
Latest available: June 2008
Release date: July 11, 2008
After a string of upside surprises for Canada's labour market, the June report showed a small decline in the number of employed with 5,000 jobs cut, weaker than expectations for a 6,500 job increase. The unemployment rate edged up to 6.2% from 6.1% and the participation rate slipped to 67.9% although remained near the record high of 68%. The wage measure for permanent employees rose 0.6% in the month resulting in the year-over-year rate slowing to 4.3%.
Once again job gains were concentrated in part-time positions which increased by 34,200 while full-time jobs fell by 39,200, adding to May's 32,200 decline. Both public sector jobs and private sector jobs declined and the number of self-employed increased by a marginal 1,400.
The one area to show a substantive increase in June was in professional, scientific and technical services, which added 37,100 positions with wholesale and retail trade adding 12,900 to their payrolls. However this was offset by declines in business, building services, health care, accommodation and food services resulting in services-producing firms cutting 5,400 jobs, the second monthly decline. In the goods-producing sector, manufacturing was flat, notable because it followed a whopping 34,200 job increase in May which marked the biggest monthly gain since June 2002. Construction jobs however fell by 15,900 trimming back the sector's job gains to 82,400 over the past twelve months.
The June data finally showed that the labour market took a breather and posted a small decline in June following May's modest 8,400 job increase, the first back-to-back soft prints since July/August 2006 but only denting the monthly average pace, which slipped to 21,000 jobs created per month. The split between full-time and part-time employment showed that only 34% of the jobs created this year were full-time -- the lowest proportion in seven years. Still, wage growth remains robust and well above the pace of inflation giving Canadian consumers the means to continue to spend despite the uncertain financial backdrop and rising gasoline prices.
The Bank of Canada will be taking this report into account when they meet next Tuesday to make their decision on interest rates. We expect the Bank to hold the policy rate steady at 3% and reiterate in the press release and Monetary Policy Update (to be released on Thursday) that the balance of risks on the inflation outlook has shifted to the upside given the high level of commodity prices, in particular energy. Signs that the labour market is starting to cool a bit after a sustained period of hot growth and that the economy, while likely to bounce back after contracting mildly in the first quarter, will still grow at a sub-potential pace, will likely keep the Bank on the sidelines in the near-term.
Productivity sags in first quarter
Latest available: First quarter 2008
Release date: June 13, 2008
Labour productivity sagged again in the first quarter, posting a 0.3% dip in line with forecasts and marking the second consecutive quarterly dip. Unit labour costs rose 1.6%, matching the fourth quarter's gain. One-off factors affecting the auto industry early this year and inclement weather saw hours work contract by 0.1%. This was a switch from the 0.5% average increase recorded in the previous two years. The economy has recorded productivity declines in two of the past six quarters.
