The Conference Board of Canada’s Chief Economist Craig Alexander and Principal Economist Alicia Macdonald offer the following insights on the October Labour Force Survey (LFS) release.
The continued strength in job creation and recent acceleration in wages supports our view that the Canadian economy will continue to perform well over the second half of this year, after hitting a speed bump in July and August.
—Craig Alexander, Senior Vice-President and Chief Economist, The Conference Board of Canada.
- After months of strong job creation and two disappointing GDP reports in July and August, expectations were low for employment gains in this month’s Labour Force Survey (LFS).
- Job creation surprised on the upside in October with the economy creating 35,300 new jobs and full-time employment increasing by 88,700.
- Since October 2016, the Canadian economy has created 308,100 jobs. Over this period, full-time employment was up 396,800, while part-time employment was down 88,700.
- Despite the strong job growth, there was an uptick in the unemployment rate—from 6.2 to 6.3 per cent this month—as the labour force participation rate nudged up.
- Strength in the labour market supports our view that the Bank of Canada will raise rates further, but not until early 2018 and only deliver a gradual 75 basis points of tightening over the course of next year.
- Robust job creation was not the only positive aspect of today’s jobs report as the release also showed a strong acceleration in wage growth.
- Average weekly wages were up 3.0 per cent in October, compared to 2.4 per cent last month and just 0.4 per cent in April of this year. The 3.0 per cent wage gain is well above the latest estimate of inflation, which was measured at 1.6 per cent in September.
- The acceleration in wage growth and continued robust employment gains in today’s LFS report support our view that after hitting a speed bump in July and August, the Canadian economy will continue to perform well over the second half of this year, albeit at a slower pace than observed over the first half of the year.