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Canadian employment: A part−time youths story in October

Fri, Nov 6 2009, 14:01 GMT
by Economic and Strategy Team

National Bank of Canada

Latest (monthly change): -43.2k (Actual); +10.0k (expected) Previous: +30.6k

FACTS: Canadian employment lost ground in October, as the economy shed 43.2K jobs after adding 30.6K one-month earlier. The decrease is fully explained by the drop in parttime employment (-59.7K). Fulltime jobs rose for a second consecutive month (+16.5). Public sector jobs fell by 25.6K and private sector jobs declined 45.2K, while self-employed increased by 27.5K. At the industry level, the goods producing sector lost 6.3K posts with the largest decline in natural resources (-11.3K) and manufacturing (-8.2K).

Construction added 11.2K jobs on the month. The service producing industry lost 37.0K positions. Trade (-30.8K) and other services (-19.9K) led the decline while transportation and warehousing (+22.2K) and health care and social assistance (+8.3K) added the most jobs in the service sector. At the provincial level 6 of 10 provinces showed a drop in employment with Alberta (-14.9K) and British Columbia (-12.9K) experiencing the largest decline. The unemployment rate rose by 0.2 percentage points to 8.6%. Total hours worked fell by 1.1%, after rising 1.6% one-month earlier. Average hourly wages rose +0.7% on the month (on a seasonally adjusted basis) and are up 3.3% y/y.

OPINION: It is very easy to draw false conclusion with this morning’s Canadian jobs report. True the headline number shows a decline of more than 40K jobs but this is clearly misleading. First, 16.5K full time jobs have been created so the Canadian economy added no less than 108K full-time jobs in the last two months. This means that October’s loss is entirely accounted for by part-time job decreases. Secondly, 75% of all job losses in October came from parttime jobs in youths (15 to 24 years old). Obviously, these are not the jobs that contribute the most to the wage bill. In fact, what is more important from a macroeconomic point of view is the salary increase of the 16.8 millions existing workers. On this point, news in October were encouraging. After two months of 0.2% gain in average hourly wage rate, October registered a solid 0.7%. As such, the wage bill in Canada is already up 2.7% in Q4. With this kind of wage growth, this morning’s report is good news for consumption. Our recovery scenario is still on track for Canada.

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Published on  Fri, Nov 6 2009, 14:03 GMT