Not as bad as it looks

Statistics Canada reported this morning that the Canadian economy lost almost 52,000 jobs in August, pushing the national unemployment rate up to 6 percent.  The Bank of Canada's Governing Council undoubtedly had a preview of the data when it met this week, and the numbers must have played a role in the decision to keep interest rates on hold for the time being.

Behind the headline, the data are not quite as dire.  Full time employment actually rose more than 40,000 in the month, bringing the year-on-year rise in such jobs to 326,000, or 2.2 percent.  This was more than offset by the loss of 92,000 part-time positions, with a remarkable 80,000 of those losses reportedly coming in Ontario. To put this full time/part time split into some sort of perspective, the average work week per employee on a national basis stood at 36.1 hours in August 2018, compared to 36.0 in the same month of 2017.

As always, the sheer volatility in Canada's monthly labour force data mean that the numbers need to be treated with caution.  Aside from the widely divergent trend in full-time and part time numbers, other oddities in the August figures include the sharp fall in employment reported for Ontario,(where most media reports suggest that labour shortages are becoming more widespread, and a rise in employment in Alberta, where the local economy is supposedly in some trouble.  A reported loss of 38,000 public sector jobs in the month also looks dubious.

It is always a good rule when looking at economic data not to put too much weight on the figures for any one month.  That is especially true when the numbers are as volatile as the Canadian jobs data seem to be.  The fall in employment reported today may well turn out to be a one-off event, but there is one other element of today's report that bears watching from a policy standpoint.  The year on year rise in wages, which moved well above 3 percent in the first half of the year, has now slipped for two straight months, standing at 2.9 percent in August.  If that trend continues, it gives the Bank of Canada one less thing to worry about.