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Canada's economy gained 12K net new jobs in August, but the unemployment rate edged up to 7.0% as more people searched for work.The headline gain was driven by a big jump in full-time jobs (+54K), largely offset by losses in part-time work (-42K). Part-time hiring has been particularly weak in recent months.While the full-time hiring tally is encouraging, job gains were again concentrated in the public sector (+27K), while private sector hiring was more modest (+6K). Self-employment was down 22K jobs in August.
On an industry basis, the goods-producing sector continued to shed jobs (-5K). The resource sector managed a positive jobs tally in August, but losses were seen in construction (-4K), manufacturing (-3K) and utilities (-1K). In contrast, the services sector continued to drive hiring (+17K), with the healthiest gains seen in public administration (+14K), education (+11K) and business, building and other support services (+6K). Educational services hiring has been particularly strong over the past year, with Statistics Canada noting that most of the gains have been at postsecondary institutions.
On a regional basis, employment rose in Saskatchewan, Newfoundland and Labrador, Manitoba and New Brunswick in August, while the other provinces were little changed. Looking at trends over the past year, while the national unemployment rate is unchanged on a year-on-year basis at 7.0%, the unemployment rate has risen in six out of ten provinces (PEI, NB, AB, SK, QC & MB).
Wage growth remained strong in August. The average hourly wage rate (for permanent employees) is 3.4% higher than a year ago, maintaining July's pace. This is likely to come in well ahead of CPI inflation in the month, pointing to solid real wage gains. In another strong point, hours worked rebounded 0.8% in August after falling 0.4% in July.
A decent hiring tally in August is in line with other stronger readings we have seen recently from Canada's economy for the third quarter. A nice pick up in hours worked also bodes well for GDP in August. We are currently tracking a 2-2.5% pace for real economic growth in Q3.
Now the bad news. It is not a positive economic sign that the more cyclical industries like construction and manufacturing are shedding jobs. While it is good news that hiring in sectors like public administration and educational services are offsetting these losses for the time being, these gains are unlikely to be sustained, and expect hiring overall in Canada's economy to slow through the remainder of 2015.
"That said, there was little in the August job numbers to change the Bank of Canada's thinking ahead of its rate decision next Wednesday. Second quarter GDP growth came in right in line with the Bank's latest forecast, and non-energy exports are exhibiting the beginnings of a positive upswing. The Bank's outlook counts on strength in non-energy exports to help offset the downturn in the energy sector. The Bank has already cut interest rates twice to help cushion the blow from the downturn in the oil and gas sector, and we expect that as the economy returns to growth in Q3, it can sit tight with the overnight rate remaining at its current stimulative level "says TD Economics,
