Canadian Employment Rises Unexpectedly; the Unemployment Rate Bumps up to 6.2%
Canadian Employment Rises Unexpectedly; the Unemployment Rate Bumps up to 6.2%
Employment in Canada rose 9,500 in October, stronger than market expectations of a 10,000 drop, after the 107,000 surge in September. However, the modest increase in employment did not prevent the unemployment rate from rising to 6.2% from 6.1% in September. The key wage measure in the report, average hourly wages for permanent workers, moderated only slightly, with the year-over-year rate dropping to 4.2% from 4.3% in September.
The increase was largely based on a 40,000 rise in the public administration component as a result of hiring for the October 14 federal election that offset broad-based weakness within the private sector. Goods-producing jobs fell 27,000, led by construction and manufacturing, which each lost 9,000 jobs. Within the service-producing component, the weakness was led by a 27,000 drop in employment in accommodation and food services.
October’s strength was narrowly based in the public sector. The weakness evident elsewhere is more consistent with the pressures confronting the Canadian economy, including the high costs of capital that has already likely sent the U.S. economy into recession. These factors are expected to start having a more dominant impact on Canada’s labour market data going forward.
In an attempt to limit the downward pressures on the economy, we expect the Bank of Canada to lower the overnight rate further to 2.00% from the current 2.25% before the end of the year. As well, we expect that these stimulative conditions will persist for most of next year as the central bank continues to temper the effect of tight credit conditions and a weak U.S. economy.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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