Canada: Mixed jobs report in July – ING

James Knightley, chief international economist at ING, notes that the Canada’s July Canadian jobs report is a really mixed bag with employment falling for the second month in a row (-24,200), the unemployment rate rising to 5.7%, yet wage growth surges to its fastest rates since 2009.

Key Quotes

“In terms of jobs, unfortunately, it is a big miss with the market looking for a 15,000 rise. There were falls in both full time (-12,600) and part-time (-11,600) jobs and this has dragged the 6-month moving average to +26,000, which is the weakest it has been since October.”

“We didn’t have a lot to go on in the build-up to today’s report, but the business surveys have been ok. The IVEY PMI has recently performed well with employment surging to a 12-month high in July so there is something of a contradiction here, especially when you consider the jobs report has private sector corporate employment falling 69,300.”

“The unemployment rate was also worse than predicted at 5.7% versus expectations it would hold at 5.5%. This is the second consecutive rise although we have to acknowledge it is coming off a four decade low of 5.4% seen in May. Given that fact we are not overly concerned, especially given the wage numbers are fantastically strong. Pay of permanent workers rose 4.5%YoY, which is the fastest rate since 2009. This suggests that the competition for workers in a tight jobs market is starting to really drive up pay, which is great news for consumer confidence and spending over the next few months.”