11 Jan 2016
CAD: Employment rebounds as the labour market remains robust despite weak growth - Nomura
FXStreet (Delhi) – Charles St-Arnaud, Research Analyst at Nomura, notes that the Canadian employment increased by 22.8k in December, stronger than expected, following a decline of 35.7k in November.
Key Quotes
“As a result of an increase in the participation rate to 65.9% from 65.8%, the unemployment rate remained unchanged at 7.1%. The details show that all of the job gains were in part-time employment (+29.2k) and in the self-employed category (+40.3k).
On an industry basis, the goods-producing sector was mostly flat (losing 0.3k jobs), with gains in manufacturing (6.1k) and natural resources (+3.8k) being offset by losses in agriculture (-7.9k) and construction (-2.8). The service sector created 23.1k jobs, mainly in health care (+16.5k), education (+15.4k) and finance and insurance (+10.3k), while there were some declines in accommodation and food (-14.4k), trade (-8.6k) and business, building and support services (-7.1k).
Growth in average hourly wages for permanent workers, an indicator followed by the Bank of Canada (BoC), moderated to 2.8% y-o-y after reaching 3.3% in November. Wage pressures remain high despite the amount of slack in the labour market, according to the BoC.
Overall, the report suggests that despite the weak growth in late 2015, the labour market remains more robust than suggested by Okun’s Law. The continued strength in wage growth remains puzzling, particularly because of the amount of slack in the labour market, suggesting that it could be owing to temporary factors. This is unlikely to meaningfully change the BoC's view of the economy, and we continue to see a 40% chance that the BoC could cut rates in H1 2015.”
Key Quotes
“As a result of an increase in the participation rate to 65.9% from 65.8%, the unemployment rate remained unchanged at 7.1%. The details show that all of the job gains were in part-time employment (+29.2k) and in the self-employed category (+40.3k).
On an industry basis, the goods-producing sector was mostly flat (losing 0.3k jobs), with gains in manufacturing (6.1k) and natural resources (+3.8k) being offset by losses in agriculture (-7.9k) and construction (-2.8). The service sector created 23.1k jobs, mainly in health care (+16.5k), education (+15.4k) and finance and insurance (+10.3k), while there were some declines in accommodation and food (-14.4k), trade (-8.6k) and business, building and support services (-7.1k).
Growth in average hourly wages for permanent workers, an indicator followed by the Bank of Canada (BoC), moderated to 2.8% y-o-y after reaching 3.3% in November. Wage pressures remain high despite the amount of slack in the labour market, according to the BoC.
Overall, the report suggests that despite the weak growth in late 2015, the labour market remains more robust than suggested by Okun’s Law. The continued strength in wage growth remains puzzling, particularly because of the amount of slack in the labour market, suggesting that it could be owing to temporary factors. This is unlikely to meaningfully change the BoC's view of the economy, and we continue to see a 40% chance that the BoC could cut rates in H1 2015.”