Canada Shows Mixed But Still Strong Job Gains

The unemployment rate for Canada in November fell to 5.1% in November from 5.2% in October. Canada, like the United States, has inflation problems whose profile looks quite similar to the U.S. inflation statistics. The two countries seem to be in the grip of the same cycle, which is usually the case. For now their domestic statistics are looking remarkably similar. What that means is that Canada's drop in the unemployment rate is unexpected and not what policy has been looking for. Canada's inflation rate for its core is over 5% and the headline CPI is much higher than that at nearly 7%.

Canadian job growth rose by 10,100 in November, sharply weaker than the 108,300 gain in October and weaker than the 21,100 in September. The three-month average gain of 46,500 is far ahead of the 4,300 average over six months and better than the 30,700 average over 12 months. In percentage terms, total employment rose by 1.9% over 12 months

Goods sector employment shed 9,400 jobs in November after gaining 45,100 in October and losing 24,800 in September. The sector has been erratic in current months. However, good sector job gains have been slowing steadily from an average of 11,300 over 12 months to an average of 8,700 over six months, to 3,600 over three months. The sector has gained 3.5% over 12 months

Within the goods sector, manufacturing jobs rose by 18,500 in November, rose by 23,800 in October and fell by 27,500 in September. Manufacturing sector jobs are marginally lower over 12 months. Gains average a monthly rise of 6,900 over six months and 4,900 over three months. Over 12 months manufacturing jobs are lower by 0.1%.

Service sector jobs gain 19,600 over November, slower than the 63,200 for October and the 45,900 in September. Service sector job gains average 19,500 over 12 months. The average decline is 4,300 over six months but now has averaged gains of 42,900 over three months. Sector gains in services have also been relatively volatile; the sector has gained by 1.5% year over year.

Within the service sector, accommodation and food supply workers have seen the fastest growth at 6.7% over 12 months. Professional and technical jobs have been the next strongest, rising 5.6% over 12 months. Jobs in information and culture have grown at a 4.5% pace. At the other end of the spectrum, the services sector jobs in transportation have declined by 3.8% over 12 months; jobs in trade have declined by 2.7% over 12 months while gains in healthcare and service professionals have increased by only 0.6%. There have also been very small gains in management. The number of managers employed has grown by only 0.2%.

The labor force participation rate in Canada has moved slightly lower. Its 12-month average is 65.1%. Its three-month and six-month averages both are 64.8%, which is the same as its value in November. The participation rate has been relatively stable; however, it tends to the weak side. Over 12 months the unemployment rate has fallen by 1%; its 12-month average is 5.4% that fell to 5.1% over six months and averages 5.2% over three months although in November the unemployment rate is back down to 5.1%.

Canada's job market emits some mixed signals the chart at the top shows. Twelve-month growth rates in that chart depict the service sector slowing; however, in the table we see that sector growth rates plotted in that chart don't necessarily carry through over shorter periods; over three months service sector growth in Canada is actually speeding up quite a bit. The job market gives this mixed picture of what's going on, although in Canada GDP growth is still firm-to-strong. There are some signs of weakening consumer spending; inflation continues to run over the top without much evidence of deceleration. In short, the monetary authorities in Canada are facing much the same sort of picture that they're facing in the United States. I would guess that the coming months are going to be crucial in both countries as the monetary authorities figure out whether their current policies are properly calibrated for what their economies are doing. There's some suggestion at current growth rates in both Canada and in the U.S. that the economies are performing too well at a time the inflation rate is too high and the central banks might be not aggressive enough with their current policy stances.