Canadian Employment Rebound In August

Total employment surged 34.3K in August following a drop of 30.4K jobs in July. Full-time jobs were down (-12.5K) while part-time jobs soared (+46.7K). The goods-producing sector was down 36.4K, a third consecutive monthly drop. Within the goods-producing sector, construction was the worst performer (-44.0K, the worst monthly decline since 2008).

The services producing sector posted strong gains (+70.6K), after a decline (- 17.0K) the month before. Among services producing sector, transportation and warehousing (+37.1K) and professional, scientific and technical services (+20.0k) were the top performers while information, culture and recreation (-17.2K) experienced a sharp drop.

At the provincial level, seven provinces posted increases in employment. Quebec experienced the largest gains (+32.5K) while Ontario showed the biggest loss (-24.9K). The national unemployment rate remained unchanged at 7.3% as the job gains offset the impacts of the increase in the participation rate.



OPINION: The report is worse than it looks, with employment propped up by part-time positions. We are particularly worried about significant declines in cyclical industries. The construction sector experienced a drop of the magnitude not seen since the last recession while the manufacturing sector, not surprisingly, doesn’t seem to be immune against the current worldwide slowdown, showing a third consecutive monthly drop in employment. The stunning performance of education lately casts some doubt about the real strength of the labour market.

We expect a reversal in that particular sector soon. Another sign that job creation should not be stellar in the months to come is that small and medium businesses confidence index fell for a fifth consecutive month at 60.0 in August, reaching its lowest since July 2009. With August's drop, hours worked are now tracking +1.7% annualized in Q3, a deceleration from Q2's 2.6% pace. All told, the details of the report warrant caution about the real economic picture in Canada. The report is a reflection of a sub-2% GDP growth environment.