The Canadian economy continued to surprise in September with the creation of 64,000 jobs, two-thirds of which were in Quebec alone. The unemployment rate remained unchanged at 5.5% in Canada, and it increased slightly from 4.3% to 4.4% in Quebec due to the increase in the pool of available workers.
Quebec saw the strongest job creation in Canada in September, with 39,000 more positions. This is the first significant increase in employment in the province in seven months. In the Montreal metropolitan area, the unemployment rate fell from 5.2% in August to 5% in September, a level lower than in Toronto (6.5%) and Vancouver (5.8%).
The active population increased by 47,000 in Quebec between August and September, more than the number of new jobs (39,000), which explains the rise in the unemployment rate. This is the largest monthly increase in the working population since data began, i.e. since 1976.
The increase of 64,000 jobs in Canada in September follows an increase of 40,000 in August.
This strength in the job market is enough to surprise economists, who had predicted between 5,000 and 25,000 more jobs and an increase in the unemployment rate.
It’s also food for thought for the Bank of Canada, whose next rate decision is scheduled for October 25. The labor market remains strong, but more importantly, wages continue to rise at a pace inconsistent with inflation returning to the 2% target, implying that further rate hikes may be necessary .
In Canada, the average hourly wage is up 5% year-over-year, following increases of 4.9% in August and 5% in July. In Quebec, wage growth has continued to accelerate since July, underlined the Institut du Québec. Salaries are up 4.2% in September on an annual basis while inflation reaches 4.6% in Quebec and 4% in Canada.
This evolution of wages will surely disappoint the Bank of Canada, estimates Sébastien Lavoie, chief economist of the Laurentian Bank. However, he does not believe that the central bank will raise its key rate in two weeks.
“The data on inflation in September, which will be published in two weeks, will have a crucial importance” on the bank’s decision, writes Desjardins economist Marc Désormeaux, in his analysis of the job market.
In September, employment increased mainly in services. Education and transportation and warehousing had gains, while financial and real estate services, construction and the information and entertainment sector had losses.
The solid growth in the labor market in September hides weaknesses, note National Bank economists Matthieu Arseneau and Alexandra Ducharme. “Three quarters of the jobs created were part-time jobs and the number of hours worked decreased (by 0.2%) in the month,” they note.
In Quebec, however, it is the opposite. “Unlike Canada, where gains are mainly attributable to part-time employment, Quebec added 23,500 full-time jobs and 15,100 part-time jobs,” underlines Florence Jean-Jacob, senior economist at Desjardins.
According to her, the strength of the Quebec labor market is astonishing in the current context. The Quebec economy contracted by 1.9% in the second quarter, recalls the economist.
Monthly employment data must be interpreted with caution, remind economists at the National Bank, who still forecast a slowdown in the labor market over the next 12 months.
