StatsCan jobs report a ‘head scratcher’ as full-time work drops

OTTAWA — The economy generated 54,100 net new jobs last month and saw its unemployment rate fall — but the headline improvements overshadowed weaker details: a rush of new part-time, public sector positions and a drop in full-time work.

The overall July increase in jobs pushed the unemployment rate back to its four-decade low of 5.8 per cent, down from six per cent the previous month, Statistics Canada’s latest labour force survey said Friday.

But a closer look at the numbers revealed that the country gained 82,000 less desirable, parttime positions last month — and it lost 28,000 full-time jobs. The public sector made the biggest contribution to the July increase with 49,600 new jobs, while the private sector added 5,200 positions.

Average hourly wage growth, which is studied by the Bank of Canada, continued its cool-off last month with a year-over-year reading of 3.2 per cent. In June, it expanded 3.6 per cent and in May the figure was 3.9 per cent, which marked a nine-year high.

“In the wacky world of Canada’s monthly employment numbers, July came up with another head scratcher, with some big headlines but some disappointments in the fine print,” CIBC chief economist Avery Shenfeld wrote Friday in a research note to clients.

Shenfeld added that there are “lots of reasons to question just how good the data really are here.”

But overall he said the report contained a “good” set of numbers that will keep markets guessing whether the Bank of Canada will introduce its next interest rate hike in September or October. CIBC predicts the next rate increase will land in October.

Bank of Montreal chief economist Douglas Porter also wrote about the jobs numbers in a research note: “Today’s job report is a classic case of ‘nice headlines, shame about the details.’ While we would still give the overall result a passing grade, it’s tough to get overly enthusiastic.”

By industry, the goods-producing sector lost 36,500 jobs in July, with a notable loss of 18,400 positions in manufacturing and a drop of 12,300 in construction.

The services sector saw strong gains last month with a combined net increase of 90,500 jobs, which was led by 30,700 positions in health care and social assistance as well as 36,500 in education.

Both Shenfeld and Porter underlined those big gains in education as signs the July numbers are likely weaker than they look at first glance. Porter noted that, in the past, summertime education employment boosts have often been reversed in the ensuing months.

National Bank of Canada chief economist Stefane Marion wrote in a report Friday that the public sector is the “only game in town” so far in 2018. Marion’s research note was titled: “Where are the private sector jobs?”

Across the provinces, Ontario gained 60,600 jobs — all in parttime work — and the unemployment rate dropped 0.5 percentage points to 5.4 per cent for its lowest reading since July 2000. The education jobs fuelled much of the gain in Ontario, Statistics Canada said.

More women between the ages of 25 and 54 years old were working in July as the category saw a gain of 30,300 jobs.