Labour Force Survey Analysis – June 2017

Another strong month for job creation in Canada

Canadian labour markets continued their hot streak in June, led by solid gains in Quebec and BC, as well as a jump in the number of part-time workers. Building on a strong May, the Canadian economy added 45,200 net new jobs last month – an increase of about 0.25 per cent. All told, there have been nearly 100,000 new jobs created across Canada in just the last two months.

These jobs numbers significantly increase the probability that the Bank of Canada will be raising interest rates sooner rather than later. In the past week or two, the Bank has been signaling that a rate hike was a possibility. Employment growth, combined with recent strong growth in exports, manufacturing sales, retail sales and a range of other indicators now make an interest rate increase more likely than not.

As a result of the additional jobs created in June, the unemployment rate fell from 6.6 per cent in May to 6.5 per cent in June. While the jobless rate was also 6.5 per cent in April, underlying conditions today are far better than they were two months ago. More Canadians are actively looking for work and the employment rate – one of the most useful but unheralded job market indicators – is at its highest level since October 2013 (the employment rate is simply the percentage of working-age Canadians with a job).

Unlike May’s labour force report, most jobs created in June were in part-time positions. All told, there were 37,100 new part-time jobs created that month, compared to just 8,100 full-time jobs. However, as noted last month, the medium-term trend in Canada has been heavily tilted towards full-time job creation. Since December, there have been 193,200 net new full-time jobs created nation-wide. Meanwhile, there are 7,300 fewer part-time positions.

Although overall job gains were strong, results varied dramatically across the country. Two provinces – Quebec and BC – accounted for the vast majority of job gains, while six of the ten provinces actually saw employment decline. Quebec led the way in June with 28,300 new jobs created, while BC added 19,700. Alberta had a reasonably good month as well, with the ranks of the employed rising by 7,500.

Elsewhere, things were not as good. All four Atlantic Provinces, as well as Ontario and Saskatchewan saw employment fall in June. In terms of sheer jobs numbers, the decrease was largest in Ontario (6,100 positions lost), but compared to the size of the provincial labour pool, that decline is hardly significant. Meanwhile, there were 3,900 jobs lost across Atlantic Canada and another 1,900 in Saskatchewan.

At the industry level, results were fairly positive. Of the fifteen major industrial categories, all but three were higher in June. Leading the way once again was professional, scientific and technical services industries, which added another 27,000 new jobs last month. That sector has created 83,700 new jobs since November. There were also large gains in agriculture (12,000 new jobs). Job growth in most other industries was relatively modest.

On the negative side, employment in business support services was down (by 15,000 positions) and there were smaller declines in transportation and warehousing, and in forestry.

Manufacturing Sector Labour Market

For its part, employment in manufacturing was relatively flat in June, as the sector added 2,900 new positions compared to May. While this increase is not especially large, it is worth noting that it comes on the heels of an exceptional May – one in which more than 25,000 new jobs were created. Oftentimes, large increases like the one we saw in May are followed by similarly large declines the following month – suggesting that the movements were at least partly statistical noise. Instead, the sector held onto – and even built upon – May’s gains.

The only downside is that labour and skills shortages that so often plague manufacturers are getting worse. While the overall jobless rate sits at 6.5 per cent, the unemployment rate in manufacturing has now fallen to 3.5 per cent. At that level, the sector is looking not just at full employment, but job shortages that could further drive up labour costs.

Manufacturing job gains were heavily concentrated in BC, which added 7,300 new positions in June. Manufacturing employment in that province is now at its highest level since December 2015. There were also 3,800 new jobs created in Quebec last month, as well as smaller gains in Nova Scotia and Manitoba. Employment was down in most other provinces.

 

 

 

 

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