Go figure

A few years ago, almost every blog post I wrote about Canadian unemployment data contained a little rant about the bizarre volatility of the figures, especially as they related to self-employment. Haven't had to do that lately, but today's employment data for June offer an fresh opportunity.

According to Statistics Canada, employment in Canada fell by 43,000 in June, its first decline since January. That compares to a consensus expectation for a 20,000 increase. However -- and there are a lot of howevers in this report -- the unemployment rate slipped two ticks to a fresh all-time low of 4.9 percent, as fewer people were supposedly seeking jobs during the survey period. That seems improbable; with widely-reported shortages of workers across the country, it is hard to imagine that the so-called discouraged worker effect is at play here. 

So who lost their job in June? It depends on how you slice it. Here is StatsCan's version:

The number of self-employed workers fell by 59,000 (-2.2%), while the number of employees held steady in both the public and the private sectors.

Employment was down among workers aged 55 and over (-51,000; -1.2%). It was little changed among youth aged 15 to 24 and the core-age population aged 25 to 54.

Employment in the services-producing sector declined by 76,000 (-0.5%) in June, with losses spread across several industries, including retail trade.

So at the risk of sounding slightly facetious, the typical job-loser was an older self-employed worker in the service sector.  It's hard to visualize who those employees might be, let alone to imagine that so may of them lost their jobs in a single month. Back to the StatsCan release for a partial explanation:

....every month some self-employed workers find work as employees. In the context of high job vacancies and accelerating wage growth, 5.0% of people who were self-employed in May became employees in June.

Of course, that bit about "high job vacancies and accelerating wage growth" makes the fall in the number of jobseekers all the more mysterious. 

Looking beyond the strange headline numbers, many of the details of the report indicate continued strength in the labour market. Total hours worked rose 1.3 percent in the month; involuntary part-time work continued to fall; and long-term unemployment finally fell back to pre-pandemic levels. As for hourly wage growth, it accelerated sharply to 5.2 percent year-on-year in June, up from 3.9 percent in May. Oddly enough, wages for unionized workers are rising more slowly than for the non-unionized.

The rise in wages remains well below the reported rate of consumer price inflation. Even so, the acceleration in wage gains in recent months will compel the Bank of Canada to stay alert for any signs of an incipient wage-price spiral. Despite the unexpectedly bad headline number, today's data will do nothing to deter the Bank from raising rates again next week, with the consensus now firmly focused on a 75 basis point hike.