Good but not great

In September Canadian employment finally returned to its pre-pandemic level. Data released today by Statistics Canada show that employment rose further in October, albeit at a slower pace. The economy added 31,000 jobs in the month, pushing the unemployment rate down by 0.2 percentage points to 6.7 percent. This is the lowest jobless rate since the pandemic began, but is still a full percentage point above the pre-pandemic rate.

The employment gains were entirely accounted for by private sector jobs, which rose by 70,000 in the month. This was offset by a fall of 38,000 in the number of self-employed individuals; this is always a volatile series, but it is striking to learn that self-employment is almost 10 percent below its pre-pandemic level and stands at its lowest point since 2007. Full-time work accounted for most of the month's gains; full-time employment for both males and females is now back to pre-COVID levels.  

In terms of sectors, the strongest gains were seen in retailing (up 72,000), offset by a slightly puzzling decline of 27,000 in accommodation and food services. Employment in the goods producing sector remains largely stagnant and is more than 130,000 lower than its pre-pandemic level.  The regional breakdown shows strong job gains in Ontario but Alberta and Saskatchewan, which have coped less well with the latest surge of COVID, both shed jobs in the month.

As always there are some interesting nuggets buried in the report that shed further light on the underlying health of the jobs market: 

• Total hours worked rose 1 percent in the month, but are still 0.6 percent below their February 2020 level. 
• The number of persons working less than half their usual hours fell by 100,000 (or 9.7 percent)  in the month but is still 14.5 percent above its pre-COVID level. 
• Almost 24 percent of employed Canadians continue to work from home. 
• Almost 28 percent of those unemployed are considered to be long-term jobless, a figure that shows little sign of improving. 
• The labour force underutilization rate fell by 0.7 percentage points to 13.1 percent in the month. 

One significant surprise: it appears that the Great Resignation supposedly underway in the United States is not being replicated in Canada.  Canada's participation rate is only 0.3 percentage points lower than in February 2020, while the comparable rate in the US is 1.7 percentage points lower. The clumsily-named job-changing rate was 0.7 percent in October, right in line with its 2016-2019 average. 

All in all the report seems to show there is still considerable slack in Canada's job market. Wages growth is also reasonably tame: StatsCan estimates that in the two years from September 2019 to September 2021, hourly wages rose 5.1 percent, barely outpacing the 4.9 percent rise in CPI over the same span. (It would be hard to find more than one Canadian in a hundred who would believe this)! These numbers will provide some short-term comfort for the Bank of Canada, but the near-ubiquitous anecdotal (as opposed to statistical) evidence of labour shortages seems certain to put upward pressure on wages in the months ahead.