By Robb M. Stewart
OTTAWA–Canada’s labor market again showed signs of resilience last month despite a cooling economy, with stronger-than-anticipated hiring and a further pick up in wages.
The rise in employment in September was more than three times the consensus forecast of economists and helped keep the jobless rate steady for a third straight month, though hiring was concentrated in part-time positions and growth in large part reflected volatility in education-services positions. Still, hints the labor market is holding on to some of its tightness may keep central bank policymakers on edge in the wake of a recent acceleration in inflation.
The number of employed working-aged people in Canada rose by 63,800 in September from the month before, while the unemployment rate was unchanged at 5.5%, Statistics Canada said Friday. Unemployment had until recently been inching upward from last summer’s record low, though it continues to lag the 5.7% it averaged in 2019 ahead of the Covid-19 pandemic.
When calculated using U.S. Labor Department methodology, Canada’s unemployment rate ticked up 0.1 percentage point to 4.6%. Hiring in the U.S. also accelerated last month, with 336,000 jobs added and the unemployment rate sticking at 3.8%, data on Friday show.
“The jobs backdrop continues to look very robust,” Michael Greenberg, portfolio manager at Franklin Templeton Investment Solutions, said. “Despite the aggressive rate hikes by the Bank of Canada, companies continue to hire, and inflation remains sticky.”
Bank of Canada officials have left the door open to further increasing interest rates but are also concerned about over-tightening monetary policy and forcing a hard landing on the economy. Inflation has cooled more slowly than the bank had earlier anticipated, even as other indicators point to faltering demand and a sharp slowdown in economic growth.
Wage growth, a key area of concern for the central bank, again accelerated in September. Average hourly wages for permanent employees rose 5.3% on a monthly basis, after climbing 5.2% the month before, pointing to inflationary pressures.
Further hinting at job-market resilience, total hours worked were virtually unchanged on-month in August and up 2.6% compared with a year earlier. And the employment rate, the proportion of those 15 years and older who were working, edged up 0.1 point on-month to 62.0% to offset a decline the month before.
The overall picture suggests the economy isn’t seriously buckling, yet, said Douglas Porter, chief economist at Bank of Montreal. “We don’t believe this is enough to tip the scales for the Bank of Canada, but it will keep their tightening bias firmly in place,” he said.
Economists said that while the jobs data muddies the picture for a central bank looking for signs past rate increases are working through the economy, bank officials may find some comfort in the details that will hold back another rate rise at the next policy meeting later this month.
Employment has grown an average 30,000 a month since the beginning of the year, yet that has failed to match the roughly 50,000 monthly jobs needed for the employment rate to remain constant. Canada’s hefty population growth again outpaced job growth in September, with the working-age population of those 15 and older jumping by 82,100. Statistics Canada estimated roughly 50,000 new jobs a month are needed for the employment rate to remain constant.
The September data shows the bulk of the jobs added were part-time. Part-time employment since the beginning of the year has risen 1.9%, ahead of the 1.0% growth seen in full-time positions.
Education services also accounted for many of the jobs added for the month, offsetting a fall in August, and the data agency noted slight variations in the time of when school-year contracts end and begin can affect month-to-month changes for the industry.
Employment again rose in transportation and warehousing, but there were fewer people working in finance, insurance, real estate and leasing for the month. Construction employment also was down, partially countering an increase in August.
The ranks of the self-employed increased for a second consecutive month in September, rising by 1.0% after a gain of 1.9% the month before. Employee numbers in the public sector were up 0.9% for the month, while the number of private-sector workers was little changed, the agency said
The Bank of Canada, which next decides on its policy rate Oct. 25, last month held its benchmark rate steady at a 22-year high of 5% after back-to-back quarter-point increases in June and July.
Economic output unexpectedly contracted on an annualized basis in the second quarter of the year, and industry-level growth in gross domestic product was essentially unchanged in July and is estimated to have only ticked up 0.1% in August. However, after cooling steadily consumer-price inflation accelerated for a second straight in August to 4%, double the Bank of Canada’s 2% target.
“There will be a lot more data coming out between now and the next Bank of Canada rate decision, and the bank will likely need to see significant weakness in these reports to prevent it from pulling the trigger on another hike,” James Orlando, senior economist at Toronto-Dominion Bank, said.
Write to Robb M. Stewart [email protected]
Corrections & Amplifications
This article was corrected at 11:00 a.m. ET. Canadian employment rose in September. The original version incorrectly said August in the headline.
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