Canadian employment report: Ugly across the board - NBF

According to National Bank of Canada’s analysts, Krishen Rangasamy, today Labor Force Survey points to the worst employment situation since the 2009 recession but they doubt the employment situation is as bad as what’s being depicted by the Labor Force Survey. 

Key Quotes:

“Canadian employment slumped 52K in August according to the Labour Force Survey, disappointing consensus which was looking for a small increase. The unemployment rate shot up to 6% as a result.”

“Full time employment was up 40K but that was more than offset by the 92K slump in part-time positions. Hourly earnings were up 2.9% year-on-year, dropping from 3.2% the prior month.”

“The Labour Force Survey (LFS) for August was ugly across the board. Aside of the large negative headline number, sharp losses in the private sector and cyclical industries such as construction and manufacturing are very disappointing. 

“A giveback was always in the cards after large job gains in the last two months and the expected deceleration of Canada’s GDP growth (which is contemporaneously correlated with employment) in Q3 after a strong second quarter. If you’re looking for some consolation, the prime-age group of 25-54 (those more inclined to buy homes) saw only a 5K drop in employment as most of the August pain fell on the 55+ age group.”

“The LFS points to the worst employment situation since the 2009 recession, with a net decline of 15K jobs so far this year. But we doubt the employment situation is as bad as what’s being depicted by the LFS. The resilience of consumption spending andthe housing market, along with declining jobless claims, all seem to be more in tune with the positive picture conveyed by Statistics Canada’s other major survey of employment, the SEPH.”