Canada created 90,000 new jobs in August, narrowing the gap with pre-pandemic employment levels more quickly than expected. Data released by Statistics Canada this morning shows 69,000 full-time roles added, suggesting that businesses are looking past a “fourth wave” of coronavirus infections as they ramp up hiring.
The unemployment rate dropped to 7.1 percent for the third consecutive month, better than the consensus market forecast at 7.3 percent.
As had been widely expected, the post-lockdown recovery in the hospitality industry accelerated: 75,000 positions were added in accommodation and food services over the month, bringing the total number of jobs in the service sector back to pre-pandemic levels.
Evidence of a labour market overheat remained weak: The job-changing rate was 0.8 percent in August, slightly above the 0.7 percent average recorded between 2016 and 2019.
A wage-price spiral doesn’t look likely: Relative to the 2019 average, wages were up 7.1 percent, while a compositionally-adjusted measure – a fixed-weighted average wage, which holds the distribution of employees across occupations and job tenures constant at the 2019 average – rose by much less, gaining only 5.2 percent.
On balance, government programs don’t seem to be holding the labour market back: Just as in the US, government income supports have exceeded lost compensation for many Canadian workers through the pandemic, making hiring difficult for many employers – particularly when filling low-skilled retail and hospitality roles. But with eligibility periods ending, and the Canada Recovery Benefit, Emergency Wage Subsidy, and Emergency Rent Subsidy programs set to expire on October 23, Canadians are eagerly heading back to work.
Canada’s jobless rate remains relatively high: According to Statscan calculations, the unemployment rate, adjusted to match the US approach, was 5.8 percent in August – 0.6 percentage points higher than in the United States.
The loonie is up slightly: With August’s data firming expectations for another cut in the Bank of Canada’s quantitative easing program at the October meeting, the Canadian dollar ground a few basis points higher on the print. In a speech yesterday, Governor Tiff Macklem admitted that the economy had slowed more than anticipated over the summer months, but said growth should accelerate into early 2022 – allowing the central bank to gradually reduce bond purchases until the balance sheet stops growing, and then begin raising rates.
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