Canadian job gains stay strong;
unemployment rate falls
Dawn Desjardins,
Assistant Chief Economist
RBC Economics Research
October 9, 2009
Canada's economy created another 30,600 jobs in September, trouncing forecasts for a 5,000 increase, the second strong showing in a row after a 27,100 increase in jobs in August. The unemployment rate unexpectedly turned down to 8.4% from 8.7% in August. A 24,500 decline in the labour force was partially responsible for the dip in the unemployment rate.
September's rise in employment reflected a 46,200 increase in goods-producing industries, while service providers trimmed back 15,600 positions. The number of full-time jobs jumped by 91,600, while part-time employment fell by 61,000. Private companies decreased employment by 17,100 reversing some of August's gain and the number on government payrolls increased by 36,400.
The largest job gains were reported in manufacturing and construction with both industries recording rises of about 25,000. Employment in retail/wholesale trade was little changed, while educational services and finance insurance and real estate recorded increased. Job losses were reported in technical services, transportation and warehousing and accommodation and food services.
Once against there was a notable rise in employment for women aged 25 and older of 41,000, marking the second month of very strong gains. Youth employment saw a net job gain of 4,200 as full-time jobs increased while part-time employment slumped. Job losses were concentrated in the men aged 24 to 54 category.
The previous weakness in labour market conditions finally appears to be showing up in wages with the annual gain in the average hourly wage rate for permanent workers falling to 2.3% from 3.5% in August, the slowest annual pace since March 2007.
The unexpectedly strong job gains and fall in the unemployment rate in September indicate improvement in labour market conditions and support our view that the economy is emerging from recession. A return to positive growth and improving labour market will be welcomed by Bank of Canada; however, at 8.4%, the unemployment still implies considerable slack in this economy. This provides reason for the Bank to maintain its commitment to a 0.25% policy rate until mid-2010.
Our forecast is that the economy will build momentum into 2010, supporting an improvement in the labour market and leading to a gradual decline in the unemployment rate. Against this backdrop, the Bank will begin to remove stimulus in the second part of next year with 50 basis-point hikes expected in both the third and fourth quarters.
