Once again Canada’s erratic labor force survey surprised economists when it reported a substantial 81,000 employment increase in August.

This writer has frequently highlighted that Canada’s monthly labor force survey often provides misleading information. Indeed, the monthly standard error on the reported data is huge, though the media rarely pays attention to this fact.

Nonetheless, the massive 81,000 rebound in Canadian employment in August was well above expectations, particularly since it followed after a temporary halt in job creation in June and July’

In August, the Canadian labor force expanded, and the unemployment rate remained unchanged at 5.7%. Over the past six months employment expanded at a healthy 30,000 monthly pace, while the twelve-month pace of job creation was even stronger at 39,000.

In August most of the new jobs that were created were in the service industries, though employment also increased in manufacturing, and construction employment contracted modestly.

From a provincial job creation perspective, Ontario (+58,000) and Quebec (+20,000) led the way in August.

Moreover, Canadian average wage gains remained quite strong at a 3.8% yearly pace. As pointed out in a National Bank article, the unemployment rate in Quebec saw a noteworthy decline to a record low of 4.7% in August.

Even though the US-China trade dispute continues to be a concern for global growth going forward, the strong job market in Canada partly explains why the Bank of Canada has been so reluctant to join in on the lower interest rate trend. Nonetheless, reality will force at least two interest rate reductions over the next half a year.

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