Canada’s labour market added more jobs than expected last month, holding the unemployment rate steady as economists watch for more signs of a slowdown.
The economy added 40,000 jobs, just enough to keep the unemployment rate from rising. The headline number was double the consensus expectation from economists.
Statistics Canada reported Friday the jobless rate held at 5.5 per cent in August, ending a three-month streak of rising unemployment.
“Canada’s job market has been following a sawtooth pattern this year, with a soft report generally followed by a snapback, and this was the month for a minor snapback,” said BMO chief economist Douglas Porter in a client note.
The decent job report bolsters financial markets’ expectations that rate cuts are not imminent and even higher interest rates are a possibility.
Nevertheless, economists tend to focus more on trends in the economy, rather than one monthly report.
“You can never just solely focus on one of these employment numbers, because they are so volatile,” said Andrew Grantham, CIBC’s director of economics.
“The underlying trend that we’re seeing over the last three to six months is still one that employment is growing … but we are falling short of the growth in the population.”
The federal agency said Canada’s strong population growth means higher monthly job gains are needed to keep the unemployment rate steady.
The monthly labour force surveys show Canada’s population has been growing by an average of 81,000 people every month this year. That pace of growth requires job gains of about 50,000 each month to keep the unemployment rate steady, said Statistics Canada.
Employment increased in professional, scientific and technical services as well as construction, while jobs were shed in education services and manufacturing.
Although the job gains made last month don’t suggest weakness in the labour market, details in the report suggest employment opportunities are not as plentiful today.
The federal agency said the job-changing rate — which represents the percentage of workers who switch jobs between months — has fallen from the peak reached in January 2022.
It’s also taking unemployed people more time to find a job compared to a year ago, as job vacancies fall.
The latest jobs reading comes days after the Bank of Canada opted to hold its key interest rate at five per cent, prompted by recent data that signaled the economy is taking a turn: the latest gross domestic product report showed the economy shrank in the second quarter.
The labour market has also eased in recent months as job vacancies fall and the unemployment rate sits higher.
But the central bank is still concerned about stubbornly high inflation and wants more confirmation that growth is stalling, including in the labour market.
Friday’s job report does little to ease the central bank’s wage growth concerns, as wages rose 4.9 per cent on an annual basis, down from 5.0 per cent the previous month.
However, economists expect the slowing economic conditions to eventually translate into smaller wage increases for workers.
This report by The Canadian Press was first published Sept. 8, 2023.