Biggest one-month gain in Canadian jobs since September 2008
RBC ECONOMICS RESEARCH
DAILY ECONOMIC UPDATE
December 4, 2009
Canada's economy created 79,100 jobs in November, busting through forecasts for a modest 15,000 job increase. This rise eclipsed the 43,200 jobs lost in October and is consistent with an acceleration in growth in the economy. The unemployment rate edged down to 8.5% from 8.6% in October as the strong employment gains outstripped the 65,800 rise in the labour force in the month.
November's gain in employment reflected a rebound in part-time employment which rose 40,400 partially recovering the 59,700 drop recorded in October. Full-time jobs increased by 38,600 for a total of 146,700 jobs created during the past three months. Both private companies and the public sector were hiring in November with the largest increases in employment in Ontario, Quebec and Alberta.
Gains were concentrated in the services-producing industries, which added 73,000 jobs and more than reversed October's 37,000 loss. A surge in hiring in educational services of 37,900 accounted for one-half the service-sector increase. Retail and wholesale trade were steady after 30,800 positions were cut in October. Finance, insurance and real estate, professional services and public administration posted solid gains in the month. In the goods-producing industries a modest 6,200 jobs were created, almost exactly recovering the 6,300 positions cut in October. Manufacturers added to their payrolls, while employment in construction and utilities was cut back.
The annual gain in the average hourly wage rate for permanent workers slowed in November to 2.1% from 2.9% in October, the slowest annual pace since March 2007.
The labour data have been very volatile but, on net, 66,500 jobs were created in the three months to November, which supports our call for more robust growth in the fourth quarter. Still, the amount of slack generated during the recession is consistent with the unemployment rate remaining relatively high, at least until the pace of economic growth heats up enough to chew through some of the large output gap.
The start to the recovery — Canada's economy grew at a 0.4% annualized pace in the third quarter — fell short of the Bank of Canada's forecast, supporting the case for monetary policy to remain stimulative until the recovery builds momentum. The soft start also keeps alive the risk that the unemployment rate will rise in the months ahead and is consistent with inflation pressures remaining subdued.
Our forecast that the fourth quarter will see a much stronger pick-up in growth, with the recovery's momentum building in 2010 sets up for the unemployment rate to peak early next year and then gradually drift low. As this occurs, the Bank will look to remove monetary stimulus, although conditions aren't likely to warrant rates to start to move higher until the third quarter of next year. On balance, this week's data are not expected to cause the Bank change its stance at next week's rate setting, with the conditional commitment to a 0.25% overnight rate likely to be maintained.
RBC ECONOMICS RESEARCH
DAILY ECONOMIC UPDATE
December 4, 2009
Canada's economy created 79,100 jobs in November, busting through forecasts for a modest 15,000 job increase. This rise eclipsed the 43,200 jobs lost in October and is consistent with an acceleration in growth in the economy. The unemployment rate edged down to 8.5% from 8.6% in October as the strong employment gains outstripped the 65,800 rise in the labour force in the month.
November's gain in employment reflected a rebound in part-time employment which rose 40,400 partially recovering the 59,700 drop recorded in October. Full-time jobs increased by 38,600 for a total of 146,700 jobs created during the past three months. Both private companies and the public sector were hiring in November with the largest increases in employment in Ontario, Quebec and Alberta.
Gains were concentrated in the services-producing industries, which added 73,000 jobs and more than reversed October's 37,000 loss. A surge in hiring in educational services of 37,900 accounted for one-half the service-sector increase. Retail and wholesale trade were steady after 30,800 positions were cut in October. Finance, insurance and real estate, professional services and public administration posted solid gains in the month. In the goods-producing industries a modest 6,200 jobs were created, almost exactly recovering the 6,300 positions cut in October. Manufacturers added to their payrolls, while employment in construction and utilities was cut back.
The annual gain in the average hourly wage rate for permanent workers slowed in November to 2.1% from 2.9% in October, the slowest annual pace since March 2007.
The labour data have been very volatile but, on net, 66,500 jobs were created in the three months to November, which supports our call for more robust growth in the fourth quarter. Still, the amount of slack generated during the recession is consistent with the unemployment rate remaining relatively high, at least until the pace of economic growth heats up enough to chew through some of the large output gap.
The start to the recovery — Canada's economy grew at a 0.4% annualized pace in the third quarter — fell short of the Bank of Canada's forecast, supporting the case for monetary policy to remain stimulative until the recovery builds momentum. The soft start also keeps alive the risk that the unemployment rate will rise in the months ahead and is consistent with inflation pressures remaining subdued.
Our forecast that the fourth quarter will see a much stronger pick-up in growth, with the recovery's momentum building in 2010 sets up for the unemployment rate to peak early next year and then gradually drift low. As this occurs, the Bank will look to remove monetary stimulus, although conditions aren't likely to warrant rates to start to move higher until the third quarter of next year. On balance, this week's data are not expected to cause the Bank change its stance at next week's rate setting, with the conditional commitment to a 0.25% overnight rate likely to be maintained.
