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Howdy! If you’re looking for a top-tier event after the so-called “Super Thursday” and if you’re ready to pillage some pips from the Loonie, then heads up because Canada will be releasing its jobs report this Friday (June 9, 12:30 pm GMT).

What happened last time?

  • Net employment change: +3.2K vs. +20.0K expected, +19.4K previous
  • Jobless rate: slid lower to 6.5% vs. steady at 6.7% expected
  • Labor force participation rate: fell to 65.6% vs. steady at 65.9% expected
  • Average hourly wage rate m/m: -0.15% vs. +0.04% previous
  • Average hourly wage rate y/y: +0.66% vs. +1.12% previous

Canada’s April jobs report was rather disappointing because it showed that the Canadian economy only saw a net increase of 3.2K jobs.

This is a long shot from the expected increase of 20.0K, as well as a much lower than the 19.4K increase reported in March. Moreover, the reading is the weakest increase in nine months.

Worse, full-time jobs fell by 31.2K, which is the largest loss in full-time jobs since July 2016. It just so happens that the 34.3K increase in part-time jobs was able to offset the large decline in full-time jobs.

The disappointment doesn’t stop there. You see, the jobless rate did improve from 6.7% to 6.5%, which is the best reading since October 2008.

However, the lower jobless rate was partly due to the labor force participation rate dropping from 65.9% to an eight-month low of 65.6%.

As for wage growth, that was a disappointment as well because average hourly earnings fell by 0.15% to $26.08 in April, which is the first monthly decline in eight months.
The year-on-year is even worse because it came in at +0.66% (+1.12% previous), which is the slowest annual rate of increase since comparable records began in 1997.

Overall, a rather disappointing jobs report, so the Loonie broadly weakened as a knee-jerk reaction, although it went nowhere on USD/CAD since the April NFP report was released simultaneously with Canada’s jobs report. And it just so happens that the April NFP report was a disappointment as well.

Overlay of CAD Pairs & Oil (Black Line): 15-Minute Forex Chart
Overlay of CAD Pairs & Oil (Black Line): 15-Minute Forex Chart

However, oil was in rally mode at the time because of Saudi Arabia’s assurances that Russia will join OPEC’s planned (at the time) extension of its oil cut deal. And as a result, the Loonie erased its gains and got pushed higher.

What’s expected this time?

  • Net employment change: between +11.0K to +15.0K expected vs. +3.2K previous
  • Jobless rate: tick higher from 6.5% to 6.6% expected
  • Labor force participation rate: steady at 65.6% expected

For the employment situation in May, estimates by economists vary, but they generally fall between an increase of +11.0K up to +15.0K.

There are outliers, though. Economists at Toronto-Dominion (TD) Bank, for one, are more optimistic since they’re forecasting a 20.0K increase.

Economists from the National Bank of Canada, meanwhile, are more pessimistic since they’re estimating that Canada only generated around 5.0K jobs in May.

Thankfully, there is a consensus that the jobless rate would worsen from 6.5% tp 6.6%. The labor force participation rate, meanwhile, is expected to hold steady at 65.6%.

Looking at the leading labor indicators, Markit’s manufacturing PMI reading eased from 55.9 to 55.1 in May. However, commentary from Markit noted that “manufacturers reported one of the strongest rates of job creation for five-and-a-half years.”

As for the more comprehensive Ivey PMI, it employment index fell from 53.7 to a nine-month low of 50.4 in May. As such, employment in May was lower compared to previous month. Unfortunately, there’s no breakdown per industry breakdown.

Moving on to the historical trends, Canada’s unadjusted employment numbers always print impressive job gains in May. However, the smoothing effect of seasonal adjustments means that the seasonally-adjusted reading is always lower. Negative numbers are rare, though, with only one negative reading in the last nine years.

As to how economists have fared with their forecasts, well, their estimates generally undershoot the actual seasonally-adjusted reading. And as a result, there are more upside surprises than downside surprises.

Anyhow, just remember an upside surprise usually triggers a quick Loonie rally as a knee-jerk reaction. But if there’s a downside surprise, then the Loonie usually gets dumped.

Also, do remember that Canada’s jobs report is generally good only for pillaging quick pips from the Loonie.

For follow-through buying or selling, forex traders usually pay more attention to oil prices. Oh, and you can check real-time prices of oil futures here and here.