Job ups & downs
More strong gains in payroll growth, but unemployment rises as workers return to the market.
OTTAWA• The Canadian economy has been dragging its feet coming out of a twoquarter decline, and that has kept hiring levels in check — or so we thought.
It turns out, businesses actually appear willing to take on some more workers, and that pattern has surfaced in the country’s latest employment data, though not necessarily accompanied by a stellar performance.
The number of workers added to payrolls was — at a net total of 12,100 — surprisingly strong in September, and comes after a similar gain the previous month, which added to July’s increase, but only by half.
Most economists had forecast a gain of 10,000 positions in September.
The downside, however, is that the unemployment rate edged up to 7.1 per cent — the highest level since February last year — from seven per cent in August. But that could be attributed to more people actually going back into jobsearch mode, and being counted as being part of the labour force.
“The unemployment rate is above where we were a year ago. And that alone speaks volumes,” said Douglas Porter, chief economist at BMO Capital Markets.
“It is consistent with an economy that has struggled to grow by much more than one per cent in the last year.”
Of the total gains in employment during September, 74,000 were part-time positions, while full-time jobs fell by 61,900.
Meanwhile, the Bank of Canada on Friday released its quarterly survey of Canadian companies that painted a weaker picture of the economy — but still showed businesses were planning to add staff in the coming months. “Taking the two (surveys) together suggests that (the economy) is, very slowly, grinding along,” said Porter, at BMO Capital Markets.
“It was encouraging to see at least a mild pickup in business intentions, and the outlook for sales as well,” he said. “That does fit with the fact that we are starting to see these very mild job gains for three months in a row.”
Diana Petramala, at TD Economics, said the BoC survey “indicated that business confidence is gradually improving.”
The survey “underscores the view that other sectors of the economy (aside from the oilpatch) would pick up some of the economic slack caused by the collapse in oil prices,” she said.
“Overall, the worst of the economic soft patch is now behind us and the economy is recovering, albeit modestly.”
Krishen Rangasamy, senior economist at National Bank, added the “good news is that firms were less downbeat than in the summer, with better intentions to hire and invest.”
“That’s due to their expectations of better sales ahead, thanks to an improved outlook for exports, courtesy of a more competitive Canadian dollar and a resurgent U.S. economy.”
For the Bank of Canada, meanwhile, neither the employment report nor the results of its own business survey are likely to influence policymakers one way of the other ahead of their next interest rate decision on Oct. 21.
Governor Stephen Poloz and his policy counsel will likely take Friday’s reports “with a grain of salt, and would want stronger proof that the economy is on the road to recovery before ruling out the need for more interest rate cuts.”
The central bank has kept its trendsetting lending rate unchanged since July when it was lowered to 0.5 per cent.