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Labour Force Survey Analysis - August 2017

Steep decline in full-time employment slows overall job gains in August

On Wednesday, September 6th, the Bank of Canada raised interest rates for the second time in almost as many months in response to a surging economy that posted its best first half-year GDP growth rate in over a decade. In the three days since, new numbers suggest that future rate increases may be shelved for the time being as both exports and labour markets posted disappointing results.

The same day as interest rates went up, Statistics Canada reported a 4.9 per cent decline in exports for the month of July. Job market numbers for August released today (September 8th) were not as bad, but they are far from the unambiguously positive results seen earlier in the year.

All told, Canada added 22,200 net new jobs in August - about a 0.1 per cent increase over the previous month. That represents the second consecutive month of relatively sluggish growth; there were just 11,000 jobs created in July. From January to June, the Canadian economy added an average of nearly 31,000 jobs per month. Over the last two months, that rate has fallen by almost half.

The main problem with August's labour market performance was a poor showing in full-time job creation. While 22,200 new jobs were added in total, the underlying figures show a massive spike in part-time employment and a similar-sized decline in the number of full-time jobs. All told, more than 110,000 net new part-time jobs were added last month, while there were nearly 97,000 fewer full-time positions compared to July.

However, Canada's unemployment rate does not distinguish between full-time and part-time work. The overall increase in employment was enough to push the jobless rate down slightly to 6.2 per cent - its lowest level in nine years. 

Job creation was flat in most provinces in August, with the notable exceptions of Ontario, PEI, and Newfoundland and Labrador. Ontario drove national employment gains, adding 31,100 net new positions - an increase of about 0.4 per cent compared to July. Those gains were fuelled in part by a recovery in education employment which had inexplicably dropped the previous month. Employment in PEI was up by about the same rate, while Newfoundland and Labrador posted a 0.6 per cent increase, partially offsetting steep job losses in July.

Most industries brought on more workers in August, especially on the services side where 35,900 jobs were added, compared to a loss of 13,700 goods-sector jobs. Leading the way were businesses in finance, insurance, real estate and related activities which created 14,600 net new positions that month. Employment was also higher in transportation and warehousing (9,800 jobs) and in accommodation and food services (8,900 positions). Meanwhile, employment was down in manufacturing, resource extraction and utilities.

Manufacturing Sector Labour Market

August saw manufacturing employment drop by about 0.6 per cent compared to July - a loss of about 11,100 positions. While this decline is relatively severe, it is important to note that it comes after a remarkable growth streak that extended from February through July, over which period manufacturers created over 41,000 jobs across the country. 

Even with the decline in August, manufacturing employment in Canada is 2.3 per cent higher than it was a year ago and through eight months, is tracking about 0.7 per cent higher compared to the same period last year.

Manufacturing job losses in August were concentrated in Quebec, which shed about 10,700 positions (a decline of about 2.1 per cent). However, those losses represent a retreat from an unusual spike in July, when more than 14,000 jobs were added. These wide swings suggest a potential statistical discrepancy; figures should be treated with caution until longer-term trends are more evident.

In addition to Quebec, manufacturing employment was also down fairly significantly in New Brunswick (6.7 per cent) and BC (1.4 per cent), with a smaller decline in Ontario (0.4 per cent).

On the positive side, there were solid gains elsewhere in the country. The largest increase was in Alberta where manufacturers brought on another 4,000 workers in August. That increase continuing the gradual recovery process in that province; manufacturers have added 18,400 jobs since January but there are still nearly 26,000 fewer positions compared to early 2015.

Growth was also strong in Atlantic Canada (outside New Brunswick), led by PEI where manufacturing continues to play a growing role in the provincial economy. Manufacturing employment in that province was up by 6.3 per cent compared to July.

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