The Canadian economy printed an upbeat employment change reading of 12.1K for the month of September, beating the consensus of a 10.5K gain, but the underlying figures are telling a different story.
Let’s take a closer look at the numbers to understand why the Loonie lost ground to its forex rivals after the release.
1. Most of the gains were in part-time hiring and self-employment
Components of the September employment change reading showed a 74K increase in part-time hiring, which was more than enough to offset the 62K DECREASE in full-time employment.
While the surge in part-time employment isn’t necessarily a bad thing, the latest numbers suggest that the quality of jobs gained during the period has actually declined.
Aside from that, the underlying figures also indicated that self-employment rose by 30.8K during the month while employment in the public and private sector companies fell by 18.6K, signaling that the longer-term outlook for the Canadian labor market is filled with a lot of uncertainty.
2. Rise in the labor force, participation rate unchanged
In case you’re wondering why the unemployment rate ticked up from 7.0% to 7.1% instead of falling to the projected 6.9% figure even when the employment change reading beat expectations, then lemme tell you that labor force participation isn’t the culprit this time.In fact, the participation rate held steady at 65.9% for September, which suggests that Canadians aren’t giving up on their job hunt.
What drove the unemployment rate higher during the period was the 30.6K jump in the number of employment-age folks from August to September 2015, putting a larger share of the overall population in the labor force.
Combined with the steady participation rate, this yielded a higher number of people actively looking for work relative to the Canadian population, hence the increase in the jobless rate.
3. Changes in the educational sector have a widespread effect
Breaking down the jobs figures per sector reveals that educational services chalked up the largest decline in hiring for September.
As it turns out, provincial contract negotiations in the educational industry are having a widespread effect, triggering a 51K drop in educational services employment, mostly in Ontario and Quebec.
According to Statistics Canada, this had a spillover effect to other related sectors such as other schools and educational support, primary and secondary schools, and universities.
“With this decline, employment in educational services was back to a level similar to that of September 2014,” the report indicated.
4. Natural resources industry is still shedding jobs
As in the previous months, the natural resources industry reported another round of monthly layoffs, as the slump in the oil and energy sector has forced companies to scale back production and hiring.
For the month of September, the natural resources industry shed 2.6K jobs, bringing the total number of layoffs to 20.3K from the same month a year ago.The utility industry also recorded a pretty sharp decline of 4.3K in hiring for the month while the transporting and warehousing sector reported 7.8K in job losses then. In contrast, the information, culture, and recreation industry managed to chalk up an impressive 32.5K increase in employment.
All in all, the latest Canadian jobs release suggests that there are still some weak spots in the economy, although the drop in educational services hiring could prove to be temporary.
Still, the report also shows that part-time employment and self-employed folks are mostly responsible for keeping hiring gains positive for the time being and that the energy sector slump poses additional downside risks.
On a more positive note, the growth in the labor force and the stable participation rate could shore up employment prospects in the longer run, which might be enough for the Canadian dollar to hold on to its recent forex gains.
What’s your take on the latest jobs data from Canada?