Canada job market stays strong

Statistics Canada reported this morning that the economy added 157,000 jobs in September. This was the fourth successive monthly gain, and far exceeded the analysts' consensus expectation of a rise of 60,000. Today's data mean that employment has now returned to its pre-pandemic level, although as we shall see, there are some significant differences in the nature of that employment. The unemployment rate fell 0.2 percentage points to 6.9 percent, leaving it still well above the pre-pandemic level of 5.6 percent.

Almost 100,000 of the new jobs created in September were in the private sector. The service sector accounted for 142,000 new jobs, though there was a slightly surprising loss of jobs in the accommodation and food services category after several strong months. This likely reflects the winding-down of the peak tourist season. Both manufacturing and natural resources posted small employment gains.

There are a couple of surprising statistics that underline how the pandemic has changed the nature of employment in Canada.  Both public-sector and private sectors employment are at or above pre-pandmic levels, but self employment is fully 240,000 (or 8.4 percent) lower. One might have expected that the loss of conventional paid employment would drive more Canadians to try self-employment, but this is evidently not the case. One caveat here, however: as noted in this blog many times before, the self-employment data are notoriously volatile from month to month.

Here's another surprising nugget. StatsCan reports that the number of people employed in jobs not requiring post-secondary education was 287,000 lower than in September 2019. The agency's reason for choosing that month, rather than the last pre-pandemic month, is not clear. It has been evident all along that the pandemic was having a much more severe impact on lower-paid employees than those in higher wage and salary brackets, and this data allows us to quantify that. 

Where does this leave the Bank of Canada? The return of employment to its pre-pandemic level is an important milestone, though the fact that the unemployment rate remains elevated allows the Bank to argue that there is still slack in the labour market. Then again, Governor Tiff Macklem was forced to admit under questioning on Thursday that Canadian inflation was running hotter and might last longer than the Bank had expected (or hoped).  Markets are quite reasonably starting to think that rate hikes may be coming rather earlier in 2022 than previously seemed likely.