Canada: Downside surprise in employment – TD Securities

TD Securities analysts note that Canada’s headline employment surprised sharply to the downside with the loss of 24k jobs in July (TD: +10k, market: +15k) split between full and part-time workers while hours worked fell by 0.6% m/m, wage growth for permanent employees firmed to a 10-year high of 4.5% y/y.

Key Quotes

“Monthly job growth is notoriously volatile and we have previously argued that recent gains were unsustainable. However, it will be more difficult to downplay the strength of wages. The BoC looks at a range of wage indicators but this alongside a recent pickup in the SEPH measure indicates the wages are starting to respond to diminished slack, which should give the BoC some added comfort to remain on the sidelines into 2020.”