The economy created 31,200 jobs last month, the government announced on Friday. This number is lower than economists’ forecasts.
Through Bloomberg
Posted on November 5, 2021
The Canadian labor market continued to recover in October as retail firms increased hiring, although the pace of gains began to slow.
The economy added 31,200 jobs last month, Statistics Canada said Friday in Ottawa, missing expectations of a gain of 41,600 in a Bloomberg survey of economists. The unemployment rate fell to 6.7% from 6.9% in September, and total hours worked rose 1%.
The report signals that the economic rebound is intact, with businesses finding workers as Covid-19 restrictions ease. Yet the data also illustrates how future job gains will return to more normal levels – which averaged 23,000 per month in the two years before the pandemic – as labor shortages ease. .
“Underlying indicators of a limited slowdown in the labor market are starting to flash,” Simon Harvey, senior foreign exchange analyst at Monex Europe Ltd., said via email.
Canada’s currency was little changed after the report, trading at around C$1.2445 to the US dollar as of 9:32 a.m. Toronto. The bond reaction was also muted, with the yield on Canada’s two-year benchmark falling one basis point to 0.97%.
The number of Canadians in the labor force actually fell by 25,000 in October, according to the report. The bulk of last month’s gains were in the pandemic-exposed retail sector, which returned to pre-pandemic employment levels with a net gain of 72,000 jobs.
Elsewhere, gains stagnated. Employment in goods-producing industries fell by 6,200. Public administration also posted a decline, after jumping in September due to a federal election that required the temporary hiring of poll workers.
All of September’s gains were in full-time employment. Average hourly wages for permanent workers rose 2.1% from a year earlier, suggesting the impact of rising consumer price inflation has yet to lift earnings wages. That should reassure Bank of Canada policymakers, who argue that broader price pressures are unlikely to trigger a labor cost spiral.
“Wages are still lukewarm,” Jimmy Jean, chief economist at Desjardins Securities Inc., said by email. “It will leave the Bank of Canada unimpressed and comfortable in the knowledge that we are not yet on the verge of massively passing on wage costs to inflation.”
Canada’s labor market has been in tears since emerging from a third wave of Covid earlier this year, generating 600,000 net new jobs since May, lifting employment above pre-pandemic levels.
Those gains prompted the Bank of Canada to scale back its stimulus efforts in a policy decision last week. Employment is about 30,000 higher than it was in February 2020, after the country lost 3 million jobs at the start of the pandemic.
Policymakers led by Governor Tiff Macklem still argue that the economy remains idle, given that the labor force has grown since the crisis began. The unemployment rate is also about a percentage point higher than pre-pandemic levels.
