Canadian jobs likely to rise steadily in coming quarters

Canada’s employment growth normalized in August. The nation added a total of 26.2k jobs in the month. With the labor force growing, the jobless rate reached 7 percent in August. On six month moving average basis, employment grew 7.8k, widely consistent with the trend seen so far in 2016. Looking at details, it came in quite strong.

Full time employment rose 52.2k in the month, after declining for two months. However, the rise was countered by a 26k decline in part-time positions. But this reversal was not sufficient to counter past moves. On an annual basis, part-time employment has been totally responsible for job gains.

Most of the net job growth was due to public sector that added 57k positions, whereas the private sector added 8.3k net positions. Given the solid public hiring, the number of employees rose 65.4k, while self-employment dropped 39.1k net positions.

Within industries, public administration added 16k positions, leading the way. Trade followed by adding 11.3k. Strong gains were also recorded in health care, information and construction. Region wise, Quebec saw most of the gains, added 21.9k jobs, following by Ontario that added 10.5k. Performances throughout the remainder of the nation were mixed in August. Ontario and Quebec also led the gains in participation, pushing the jobless rates higher to 7.1 percent and 6.7 percent respectively.

Following a subdued July report, August employment report was a modest rebound in hiring, especially given the details, said TD Economics in a research note. Gains in job was mainly due to increase in full-time employment, while jobless rate increased for the ‘right’ reasons as more Canadians were involved with job markets in the month.

However, it is still quite a volatile series. On a long-term perspective, labor markets in Canada continue to be in line with the economic sluggishness that has characterized the first half of 2016, added TD Economics. Trend employment rise has averaged 7.2k in 2016, approximately half of the rate seen in 2015. Furthermore, the rebound in full time employment was not sufficient to counter sizeable losses in the earlier months. Thus part-time employment continues t o be the driver of job growth on a trend basis.

“We do expect a more constructive trend to emerge, with steady job gains forecast for the coming months and quarters, which will gradually take the unemployment rate lower”, noted TD Economics.