Canadian Employment (August 2018)

Canada sheds plenty of part-time jobs in August

• August saw a loss of 51.6k net jobs from the Canadian economy. The unemployment rate rose 0.2 percentage points to 6.0%. 
• More than 40.4k full-time positions were added in the month, but these were swamped by a -92.0k drop in part-time employment, more than reversing July's gains. By type, the losses were spread across both types of employment: the public sector shed 38.0k net positions, and the private sector 30.7k. Self-employment rose 17.2k. 
• By sector, the losses showed up in professional services (-22.1k, largely in Ontario), wholesale and retail trade (-19.6k), and construction (-16.4k).
• Regionally, net losses were almost entirely concentrated in Ontario, which shed 80.1k jobs, sending its unemployment rate up to 5.7% (from 5.4%). Alberta turned in a solid performance, adding 16.2k net positions and drawing a similar number people back to the labour force for an unchanged unemployment rate of 6.7%. The other provinces saw little change in net employment.
• Despite the decline in employment, aggregate hours worked eked out a small gain, rising 0.2% month-on-month (1.6% year-on year). Wages were again a soft spot: average hourly earnings for permanent employees decelerated to 2.6% year-on-year (from 3.0% in July).  
• Looking through the monthly noise, the trend (6 month moving average) pace of job gains dipped to about 10k, as year-on-year job gains decelerated to 0.9%. Of note, these gains have been by and large in full-time employment (+2.2%) as part-time work was down 4.3% y/y following today's marked decline.

Key Implications

• What a mess. This was yet another month of jobs numbers with odd details. Beneath a concerning headline report lay solid gains in full-time employment. Even more, it was by and large one province, Ontario, driving the moves. With hours worked up modestly, this isn't all that bad of a report, with the notable exception of wages.  
• This is now the third month in a row with softening wage growth. Wages growth in August was more or less in line with the historic average – not cause for concern necessarily, but also not cause for celebration. 
• For the Bank of Canada, this report will likely be put into the broader context of slowing trend job gains consistent with an economy operating near capacity. Given this week's messaging, we continue to see October as the likely timing for the next monetary policy interest rate hike. To the extent that wage growth remains soft (and the softness is confirmed in the Bank's preferred measures), a slower pace of hikes thereafter remains likely. 

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