Labour Force Survey Analysis - October 2018

Modest job gains in October

The Canadian labour market eked out modest job gains in October as increases in Quebec overcame losses in BC, Alberta and Atlantic Canada. At the end of the day, there were 11,200 net new jobs created across the country last month - an increase of just 0.06 percent compared to September.

It is difficult to discern any meaningful trends from Canada's recent job-creation performance. Strong gains in September overcame large losses in August, while October offered little information about the direction in which the economy is headed. On a year-over-year basis, job creation rates remained steady at about 1.1 percent. However, that rate is poised to slow in the coming months as job gains in November and December of last year were especially strong.

Although there were few new jobs created last month, the unemployment rate nevertheless fell by one basis point to 5.8 per cent. With flat job growth, the decline in the jobless rate was largely the result of fewer Canadians looking for work; the labour force participation rate fell from 65.4 percent to 65.2 percent - its lowest level in more than 20 years.

The silver lining in October's jobs report is that all the gains were in full-time positions. There were 33,900 net new full-time jobs created last month, offsetting a decline of 22,600 part-time positions. In fact, full-time job growth has bee relatively healthy throughout the year; from January through October, there were about 292,000 more full-time jobs in Canada in 2018 than there were over the same period last year.

In spite of low unemployment and widespread reports of labour and skills shortages, there has been no significant upward pressure on wages. Average hourly wages were up slightly in October, building on a larger gain in September. However, wages are essentially the same as they were in April and on a year-over-year basis, growth in average earnings has been steadily declining for five consecutive months.

As noted above, Canada's job gains in October - modest as they were - were concentrated in Quebec. That province accounted for about 80 percent of Canada's overall employment growth, adding 9,100 jobs (an increase of about 0.2 percent) compared to September. However, that increase did not represent new job growth as much as a partial recovery from recent losses. With October's gains, employment in Quebec has returned to about August's levels. Moreover, there are about 16,400 fewer jobs in Quebec today than there were in May.

Outside of Quebec, there were small employment gains in Ontario, Manitoba, Saskatchewan and Nova Scotia. Saskatchewan and Ontario each added 2,500 jobs which, on a percentage basis, is obviously much more significant to the former than to the latter. Meanwhile, the Alberta economy lost 2,700 jobs, while there were smaller losses in BC, New Brunswick and Newfoundland and Labrador.

At the industry level, there was more bad news than good. Of the 16 broad industrial categories, only six posted gains, while there were job losses in the remaining 10. On the positive side, job gains were concentrated in three sub-sectors: business and support services added 22,000 net new jobs, while there were 19,300 new positions created in wholesale and retail trade industries, and 15,300 jobs in health care and social assistance.

On the negative side, there were 14,500 fewer jobs in finance and insurance, wiping out similar-sized gains in September, while there were 17,400 fewer jobs in miscellaneous services industries. There was also a notable drop in employment in resource-based industries, with 7,100 fewer jobs in forestry, fishing, mining, and oil and gas; and 2,300 fewer jobs in agriculture.

Manufacturing Sector Labour Market

For its part, Canada's manufacturing sector posted small job gains in October as employment in the sector continues to stabilize after months of steady declines. There were 1,700 new manufacturing jobs created in October, building off the 3,100 jobs added the previous month. However, there are still 55,400 fewer manufacturing jobs in Canada today than there were at the beginning of the year.

While job creation in manufacturing is slow, sectoral labour markets remain extraordinarily tight. The unemployment rate in manufacturing fell from 3.7 per cent in September to 3.3 per cent in October. With a growing number of businesses reporting that they cannot fill skilled labour positions, wage pressures in the sector are beginning to mount, even as they slow in other industries. Manufacturing wages are 3.3 percent higher than they were 12 months ago, compared to a 2.2 percent increase for the Canadian economy as a whole.

October's manufacturing job gains were the result of growth in Ontario offsetting losses elsewhere - especially in Alberta. Ontario manufacturers added 10,500 new positions last month, ending a streak of three consecutive months of job losses. Even so, there are still 8,400 fewer manufacturing jobs in Ontario today than there were in June.

Outside of Ontario, there were strong manufacturing jobs gains in Newfoundland and Labrador (900 positions, or an increase of 10.7 percent compared to September), and in Saskatchewan (1,000 jobs, or 3.6 percent). New Brunswick and PEI also added a small number of manufacturing jobs each.

Meanwhile, Alberta manufacturers shed 5,500 jobs last month. That decline (of almost 4.2 percent) drove employment in the sector to its lowest level in 11 months. There were also 2,300 fewer manufacturing jobs in BC as that province gave back some of September's gains, while Quebec lost 2,100 jobs in the sector

In spite of October's decline, Alberta remains Canada's manufacturing jobs growth leader so far in 2018. Through 10 months, provincial manufacturing employment is tracking 9.4 per cent higher compared to the same period last year. Although it should be noted that the province is still in the process of climbing out of the deep recession trigger by the 2014/2015 decline in oil prices. PEI and Nova Scotia have also seen strong manufacturing jobs growth so far this year, with employment tracking 4.9 percent and 2.7 percent above 2017 levels.

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