A couple of times each year, Canada releases its employment data a week after the US non-farm payrolls report. This is done for technical reasons. This was one such month, but given the data that StatsCan released this morning, you'd be tempted to think they were doing it to secure bragging rights.
Recall that the US data for May showed that the economy added 138,000 jobs in the month, a figure that was generally seen as a disappointment. Well, StatsCan's data* today showed that the Canadian economy added 55,000 jobs in the month, against an analyst consensus of about 15,000. On the usual 10:1 comparison between the two economies, that's the equivalent of a US non-farms gain of more than 500,000 jobs.
The details of the report were equally impressive. Full-time jobs rose by 77,000 in the month, offset by a fall in part-time positions. Moreover, almost all the new jobs were in the private rather than the public sector, and there was little sign of the volatility in "self employment" that occasionally renders these reports suspect. Moreover, there was considerable strength in the manufacturing sector, which added 25,000 jobs in the month, though given that this sector may be at particular risk once the NAFTA renegotiations begin, these gains may not be sustained.
The unemployment actually ticked up to 6.6 percent in the month. However, since this reflected "encouraged" workers returning to the jobs market, it does not materially detract from the strong overall tenor of this report.
Sustained strong employment growth over the past several months means that the economy has added 317,000 jobs in the past year, the strongest year-on-year growth since early 2013. In more normal times, such a development would have the central bank starting to think about tightening policy. There's no doubt that today's report will nudge the Bank of Canada's thinking in that direction, but an early rate move remains unlikely because wage gains, at just 1 percent year-on-year, remain so tame. Some analysts are suggesting that if the job market continues to tighten in this way, wage gains will start to take off, and the Bank will be forced from the sidelines. That's a reasonable hypothesis, but with headline inflation still just as tepid as wage growth, the Bank is highly unlikely to start the tightening process until 2018.
*Apologies for not providing a link to the StatsCan release itself. Their website is down (again).
No comments:
Post a Comment