Preview: Due October 9 - Canada September Employment - Only a modest rise after a sharp decline
We expect Canadian employment to increase by a marginal 5k in September after 41.7k decline in August, though a second straight decline after three straight healthy gains is a significant risk. We expect the unemployment rate to increase to 6.5% after two months at 6.4%.
August’s decline appeared corrective. Employment saw strong gains of 75.1k in July and 87.8k in May with a moderate 18.1k in between for June. The May and July gains were broad based outside a July dip in the public sector. June’s data was strong in private services but with partial offsets from slippage in goods and the public sector. August saw a second straight increase in goods at 9.8k but a sharp fall in services of 51.5k, after three straight strong gains averaging above 50k. Both private and public sector services contributed to August’s slide.
With fresh US tariffs a threat to manufacturing we do not expect August’s rise in goods (which was led by manufacturing at 22.1k) to be repeated. June and July service gains may have been inflated by the World Cup. We assume the correction from the World Cup was completed in August but we expect September growth in services to be moderate at 10k, only marginally outweighing a fall of 5k in goods. We expect September’s employment gain to be led by a 15k rise in full time work, which led August’s decline, falling by 35.9k.
The labor force fell by 36.8k in August to correct a 60.5k increase in July that was well above trend. We expect a 10k rise in September that would be enough to lift unemployment to 6.5%, though before rounding the rise would be marginal, to 6.468% from 6.449%. We see participation stable at 65.0%. August’s report was also notable for a sharp slowing in the average hourly wage for permanent employees, to 2.0% yr/yr from 3.0% in July. We expect a correction to a still subdued 2.4% in September.
