Category: Talent & Market Insights

Statistics Canada released its September 2018 Labour Force Survey which shows a gain of 63,300 jobs for the Canadian economy which drove the unemployment rate down to 5.9 per cent, down from 6.0 per cent in August. Contributing to the drop in unemployment was a gain of 80,200 part-time positions.


The Numbers

63,300: The economy gained 63,300 jobs in September.
5.9%: The unemployment rate fell to 5.9 per cent.
2.2%: Weekly wages increased 2.2 per cent over the last year.

The Good

September’s job gains, fueled by the increase in part-time employment reversed the job losses from the previous month. The report shows that in Ontario, employment increased by 36,000, the third increase in four months. Employment in British Columbia increased by 33,000, driven by gains in full-time work (+26,000). In the third quarter, employment increased by 54,000, following a decline over the first half of 2018.
In September, more Canadians worked in construction; finance, insurance, real estate, rental and leasing; public administration and agriculture. Compared with September 2017, employment was up 222,000 or 1.2 per cent, entirely the result of gains in full-time work (+224,000). Over the same period, total hours worked increased 0.7 per cent.

The Bad

The Canadian economy lost 16,900 full-time jobs in September. At the same time, employment fell in information, culture and recreation and business, building and other support services.  Employment increased in Ontario and British Columbia while it was little changed in the remaining provinces. Statistics Canada reported that the number of self-employed Canadians declined by 35,000 after recording an almost equal total increase over the past twelve months.
The monthly labour force survey also found that all of the job gains in September were made by workers in the core 25-to-54 age range with virtually no change in youth employment. September’s youth unemployment rate stood at 11.0 per cent, up by 0.1 percentage points from the previous month and more than 5 percentage points higher than the working population as a whole.

The Unknown

Canada agreed to a new trade deal with the United States and Mexico to replace the North American Free Trade Agreement (NAFTA). The CBC notes that as “details of the newly renegotiated deal (the United States-Mexico-Canada Agreement or USMCA) emerge, some questions remain about what Canada’s signature guarantees in terms of protections, and what concessions were made…”
While the Canadian dairy industry will have new barriers imposed in the new agreement, the Canadian auto industry appears to be a winner in the USMCA, but these wins may not be lasting.  The CBC report continues, “Canada seems to have escaped..Section 232 national security tariffs — which would slap 20 to 25 per cent duties on cars and auto parts imported into the U.S… no hard limit will be placed on Canadian auto exports to the U.S., though if the U.S. moves forward with the imposition of worldwide 232 tariffs on autos, those would also apply to Canada.”

The Australia Bureau of Statistics released its August Labour Force Key Statistics. The 44,000 net new jobs added beat analyst expectations. Of those, 33,700 were full-time positions. The jobless rate held steady at 5.3 per cent because more people joined the labour force. The release also included quarterly data on underemployment and underutilisation. In seasonally adjusted terms, the underemployment rate fell by 0.3 percentage points to 8.1 per cent. Underemployment refers to people who are working but would like to be working more hours. The underutilisation rate, which is a sum of underemployment plus the unemployment rate, decreased 0.4 percentage to 13.4 per cent.

The Numbers

44,000: The Australian economy added 44,000 jobs in August.
5.3%: The Australian unemployment rate remained at 5.3 per cent.
65.7%: Labour force participation increased to 65.7 per cent.
+4: According to the NAB, the business confidence index fell to +4 index points.

Upside

The increase in labour force participation demonstrates that the strong job market is motivating more Australians to look for work. Unlike months when job gains were mostly bolstered by part-time jobs, the August increase was driven by full-time employment. This good economic news is underscored by the drop in the underutilisation rate, which declined to a five year low.

New South Wales led the nation with an employment increase of 43,200 and a 0.2 percentage drop in the unemployment rate to 4.7 per cent. Victoria’s jobless rate also fell 0.2 percentage points to 4.8 per cent while Tasmania’s rate dropped an impressive 0.5 percentage points to 5.8 per cent.

Downside

The Australian Business Confidence Index fell to a two-year low. At 4.0, this rate is also below the index’s long-term average. One likely contributor to the plunge in confidence was Australia’s political leadership changes. The survey was conducted shortly after the Australian Liberal Party voted in Scott Morrison as its new leader and Australian prime minister. The decrease in the business confidence index was in striking contrast to the Business Conditions Index which saw a healthy increase in August.

Queensland saw a 0.2 per cent increase in its unemployment rate which rose to 6.4 per cent. Western Australia had 0.4 percentage point rise to 6.4 per cent.

Unknown

Prospects for significant wage growth in the near future are unclear. Based on the premise that an increased demand for workers in a diminishing talent pool drives pay growth, a key variable is the level of labour supply excess. As the Financial Review reports:

“Using up this excess supply of labour is a prerequisite for a meaningful rise in wage growth,” Capital Economics chief Australia economist Paul Dales said. “Progress is clearly being made, but there is a long way to go yet.”

Stubbornly elevated readings on underemployment over recent years have defied a steady decline in the headline jobless rate and contributed to uncertainty around the degree of slack in the labour market.

“The ongoing decline in underemployment, particularly in Victoria, is something we are watching closely as it could be signalling a turning point for wage inflation,” Westpac senior economist Justin Smirk said.

The Office for National Statistics released its September Labour Market Bulletin which reports on May, June and July 2018. In those three months, 3,000 jobs were added to the UK economy with the unemployment rate holding steady at 4.0 per cent. The report shows that average weekly earnings for UK employees in nominal terms (that is, not adjusted for price inflation, minus bonuses) increased by 2.9 per cent over the last year.

The Numbers

3,000: The economy added 3,000 jobs over the May-July 2018 period.
4.0%: The unemployment rate remained unchanged from the previous quarter.
2.9%: Wages (excluding bonuses) increased 2.9 percent over the last year.

The Good

Wages rose faster than prices in the last three months, which beat analyst expectations. Wages, excluding bonuses, were up 2.9 per cent, against an inflation rate of 2.5 per cent, according to labour market statistics. The number of people working rose by 3,000 in the past three months to 32.4 million. Over the same time period, the number of job vacancies rose to 833,000. This is the highest number since these records began.

The number of unemployed people in Britain fell by 55,000 to 1.36 million, keeping the jobless rate at 4 per cent which is the lowest in more than 40 years.  Compared to the same time last year, 261,000 more people in the UK are working. Youth unemployment has declined to the lowest rate on record.

The Bad

Despite the recent wage growth, average weekly wages are still lower than the 2008 levels achieved before the financial crisis, remaining £31 below the pre-crisis average. The annual rate of growth in pay is still lower than the averages before the financial crisis when wages often rose by about 5 per cent.

Productivity also remains lower than pre-recession levels.  As Bloomberg reports:

“Without a significant improvement, firms may find their profit margins coming under pressure and increase prices to compensate. Flash figures for the second quarter show output per hour rose 0.4 per cent, leaving productivity up just 1.5 per cent on the year — below the rates enjoyed before the financial crisis.”

The Unknown

The relatively low number of jobs added may be an indication that the recent surge in jobs may have leveled off. Uncertainty over Brexit may be having an impact on workers who might otherwise move to new positions to increase their income.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted in the Guardian that while the strongest pay growth was among people moving jobs, workers may be increasingly opting to stay put while the risk lingered of no deal with the EU.“It would be a mistake to extrapolate the recent pickup in wage growth [into a trend],” he said.

The Labor Department released its August jobs report which shows 201,000 jobs added to the U.S. economy. U.S. employers have added to payrolls for 95 straight months, extending the longest continuous jobs expansion on record. The unemployment rate remained steady at 3.9 percent.


The Numbers

201,000: The economy added 201,000 jobs in August.
3.9%: The unemployment remained at 3.9 percent.
2.9%: Wages increased 2.9 percent over the last year.

The Good

The 201,000 jobs added in August modestly beat analyst expectations. Average hourly earnings for all private-sector workers increased 10 cents last month to $27.16, a 2.9 percent increase from last August. This increase is the strongest year-over-year rise in earnings since the current expansion began in 2009. Over the past six months, 781,000 part-time workers have moved to full-time jobs.
Professional and business services added 53,000 jobs in August and 519,000 jobs over the year. The healthcare sector also had robust job gains with an addition of 33,000 positions in August and 301,000 since August 2017.

The Bad

The reason that the unemployment rate remained unchanged despite the job gains is that the labor participation rate dropped .02 percentage points from the previous month. This may indicate that there are limits for the tight job market to lure back those who have stayed out of the workforce.
While the loss of 3,000 manufacturing jobs in August may not be significant, most of these losses were in trade-affected industries like automobiles and transportation equipment. Without a resolution to the current trade disputes, the employment outlook in key manufacturing sectors is unclear and may have negative ripple effects in the nation’s industrial heartland.

The Unknown

It is not certain whether the decrease in the labor force will become a trend in the coming months. In 2008, more than 66 percent of adults were in the labor force which decreased to 62.7 percent in early 2015. This is the same level it fell to in August. A major factor is demographic change, with baby boomers hitting retirement age. It is uncertain whether a potential shortfall in workers can be addressed through immigration and automation.

Statistics Canada released its August 2018 Labour Force Survey which shows a loss of 51,600 jobs from the Canadian economy, driving the unemployment rate up to 6.0 per cent from 5.8 per cent in July. The loss of 92,000 part-time positions contributed to the drop.


The Numbers

-51,600: The economy lost 51,600 jobs in July.
6.0%: The unemployment rate rose to 6.0 per cent.
2.9%: Wages increased by 2.9 per cent over the last year.

The Good

Offsetting the loss of part-time jobs, full-time jobs rose by 40,400. For three provinces, the news was more positive than the nation as a whole. Employment in Alberta increased by 16,000, where the unemployment rate remained at 6.7 per cent because more people participated in the labour market.
In Manitoba, employment rose by 2,600, due to an increase in part-time work, and the unemployment rate was 5.8 per cent. While over the last year, employment in the province was unchanged, the unemployment rate increased 0.8 percentage points as the number of people looking for work increased in August. In British Columbia, employment edged up and the unemployment rate increased 0.3 percentage points to 5.3 per cent as more people in the province were brought into the labour market.
Compared to 12 months earlier, Canada’s overall employment is still up 0.9 per cent, following the addition of 171,700 jobs, including 326,100 full-time positions.

The Bad

The job losses in August wiped out the gains made in July. Ontario, Canada’s most populous province, lost 80,100 jobs last month after gaining 60,600 in July, both of which were almost entirely caused by volatile swings in part-time work. Ontario’s August decrease, a drop of 1.1 per cent, was by far the biggest decline among the provinces.
Average hourly wage growth continued its gradual slide in August to 2.9 per cent after increasing 3.2 per cent year over year in July and 3.6 per cent in June. The slowing of wage increases may create difficulties for Canadian employers who could see workers leave for jobs in other companies with the hope of substantial salary increases.

The Unknown

The result of the current intense negotiations between the U.S. and Canada regarding the future of the North American Free Trade Agreement or NAFTA may have a profound effect on the Canadian economy for years to come. Because the United States is Canada’s biggest trading partner, employers in the many sectors that depend on exports for profitability may hesitate to expand their workforce until a final agreement is reached.

The Australia Bureau of Statistics released its July Labour Force Key Statistics and the Average Weekly Earnings, May 2018 numbers, showing a decrease in employment and missing analyst expectations. The unemployment rate also fell slightly due to a decrease in labour force participation.

The Numbers

-3,900: The Australian economy lost 3,900 jobs in July.
5.3%: The Australian unemployment rate decreased to 5.3 per cent.
65.5%: Labour force participation decreased to 65.5 per cent.
2.7%: From May 2017 to May 2018, the average weekly earnings of adults increased 2.7 per cent

Upside

While the numbers in the July jobs report are mixed, economists say the overall trend points to a strong economy, according to Business Insider. Experts say the decrease in employment is mainly due to “monthly volatility,” or normal month-to-month variation. Additionally, the loss in jobs can be attributed to part-time employment, as full-time employment actually rose by 19,300 in July. The unemployment rate is also the lowest rate since 2012.

There is also positive news for wage growth in Australia, though it isn’t apparent in the overall number. Staffing Industry Analysts reports that the gender wage gap for adults employed full time has dropped to its lowest point in twenty years. The gender pay gap fell from 15.3 per cent to 14.6 per cent in the past 12 months.

Downside

The decrease in employment is disappointing, as economists had projected an increase of 15,000 jobs in July. Additionally, the decrease in unemployment can be attributed to a decrease in labour force participation.

Wage growth remains slow, and experts say while the economy is strong, it isn’t likely to trigger a stronger increase in wages yet.

Unknown

Looking ahead, economists debate how this month’s numbers impact the country’s slow movement toward full employment, which experts say will occur with an unemployment rate of 5.0 per cent. Growth in 2018 has been slower than 2017, but it continues on a positive trajectory.

The Labor Department released its July jobs report which shows 157,000 jobs added to the U.S. economy, continuing the longest stretch of job growth in the nation’s history. The unemployment rate fell 0.1 percentage points to 3.9 percent from the previous month.

The Numbers

157,000: The economy added 157,000 jobs in July.
3.9%: The unemployment rate fell to 3.9 percent.
2.7%: Wages increased 2.7 percent over the last year.

The Good

The July jobs report shows continuing and steady job growth. Although the increase in jobs last month came in slightly below expectations, figures for payroll increases in May and June were revised substantially higher. The Labor Department reported that the economy added 268,000 jobs in May, up from an initial estimate of 244,000, while the June gain was revised upward to 248,000 from 213,000.
Healthy expansion continued in key sectors of the economy including manufacturing with an annual increase of 327,000 jobs and business and professional services, which grew by 518,000 positions in the last year.

The Bad

The 2.7 percent annual increase in wages reported in July is not significantly different from the wage growth figures over the last two years. While the burden of major salary increases has not yet directly impacted employers, wage stagnation can create challenges in employee retention.  Wages have remained steady while the cost of living has increased for many Americans. For example, it is estimated that home prices are growing twice as fast as income growth.  In the current job market, candidates can be reasonably confident that there will another job waiting for them if they leave their current position. Because research shows that money is the top motivator for employees to quit their jobs, there is significant urgency for employers to have sound recruitment and retention programs in place.

The Unknown

The recently imposed tariffs on U.S. trading partners does not yet appear to have affected the domestic job market. However, threats of an all-out trade war with China may force employers to rein in hiring projections. It has been estimated that trade with China supports as many as 2.6 million U.S. jobs, and a sharp and sudden decrease in trade with China could have a significant negative impact on the U.S. economy.