Canada’s labor force survey in November will be crucial in judging whether the recent job gains reflect real improvement in the labor market or are just statistical noise. Beneath the surface, private sector employment looks more like a recession, while wage growth is accelerating at a pace inconsistent with the Bank of Canada’s inflation target, National Bank of Canada economists Mathieu Arsenault and Alexandra Ducharme said.
Job precarity in the private sector is worsening, despite rising wage growth
“November data from the Labor Force Survey (LFS, conducted among households) will be published on Friday. We await these figures with bated breath, as they will reveal whether the improvement over the past two months has been confirmed or was just a statistical fluke. This momentum is already contradicted by weak data showing weak appetite for hiring.”
“Doubts increased last week with the release of the Survey of Employment, Earnings and Hours (SEPH, conducted among businesses). This showed a monthly loss of 58,000 jobs in September, while the LFS reported an increase of 26,000 jobs after comparison adjustments. Over six months, employment is growing in just 41% of private sector industries (out of 251), a proportion normally only seen in a recession.”
“However, this fragility has not prevented wages in the private sector from accelerating, rising at an annual rate of 5.5% over the past six months, a pace that is inconsistent with bringing inflation back to target. Canada’s wage dynamics limit the Bank of Canada’s ability to cut interest rates further.”
