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8 Feb 2016
CAD: Small decline in employment numbers – Nomura
Charles St-Arnaud, Research Analyst at Nomura, notes that the Canadian employment declined by 5.7k in January, weaker than expected, following an increase of 24.1k in December.
Key Quotes
“The participation rate remained unchanged at 65.9%, but the unemployment rate increased to 7.2%. The details show that all of the job losses were in the self-employed category (-20.2k).
On an industry basis, the goods-producing sector declined by 25.3k, with losses in agriculture (-13.7k), manufacturing (11.0k) and construction (-5.4k). The service sector created 19.7k jobs, mainly in information, culture and recreation (+15.8k), trade (+8.4k) and other services (+9.6k), while there were some losses in transport and warehousing (-10.4k) and in public administration (-7.2k).
Growth in average hourly wages for permanent workers, an indicator followed by the Bank of Canada (BoC), moderated to 2.7% y-o-y after reaching 2.8% in December. Wage pressures remain high, but have moderated, despite the amount of slack in the labour market, according to the BoC.
Overall, the report suggests that, despite the weak growth, the labour market remains more robust than suggested by Okun’s Law. The continued strength in wage growth remains puzzling, particularly because of the amount of slack in the labour market. This is unlikely to meaningfully change the BoC's view of the economy. We continue to expect the Bank of Canada to keep rates on hold, and wait to see how large the upcoming fiscal stimulus will be.”
Key Quotes
“The participation rate remained unchanged at 65.9%, but the unemployment rate increased to 7.2%. The details show that all of the job losses were in the self-employed category (-20.2k).
On an industry basis, the goods-producing sector declined by 25.3k, with losses in agriculture (-13.7k), manufacturing (11.0k) and construction (-5.4k). The service sector created 19.7k jobs, mainly in information, culture and recreation (+15.8k), trade (+8.4k) and other services (+9.6k), while there were some losses in transport and warehousing (-10.4k) and in public administration (-7.2k).
Growth in average hourly wages for permanent workers, an indicator followed by the Bank of Canada (BoC), moderated to 2.7% y-o-y after reaching 2.8% in December. Wage pressures remain high, but have moderated, despite the amount of slack in the labour market, according to the BoC.
Overall, the report suggests that, despite the weak growth, the labour market remains more robust than suggested by Okun’s Law. The continued strength in wage growth remains puzzling, particularly because of the amount of slack in the labour market. This is unlikely to meaningfully change the BoC's view of the economy. We continue to expect the Bank of Canada to keep rates on hold, and wait to see how large the upcoming fiscal stimulus will be.”