Canada’s Jobless Rate Falls to Four-Decade Low on Part-Time Work

Bloomberg.com — Canada’s jobless rate returned to four- decade lows in July on stronger-than-expected employment gains.

The unemployment rate declined to 5.8 percent from 6 percent in June, matching the lowest level since the 1970s, Statistics Canada reported from Ottawa. The economy added 54,100 jobs, another strong month following a 31,800 gain in June. The breakdown was less rosy, with all the gains in part-time employment and concentrated in public sector service jobs.

Still, the report is consistent with a robust economy that continues to generate jobs at a steady pace and looks to be running up against capacity.

One question policy makers have been seeking to answer is how much slack remains in the labor market, and whether a tightening jobs market could prompt the Bank of Canada to raise interest rates and trigger a slowdown in growth.

Friday’s report — based on a survey of households — may provide some comfort that tightening is happening at a gradual pace. Wage gains slowed during the month, with average hourly wages up 3.2 percent from a year ago. That’s the slowest pace since February. Wage gains for permanent workers were 3 percent, the slowest this year.

While the monthly employment gains were the strongest this year, total actual hours worked was up just 1.3 percent in July, the lowest since November 2017. That’s because the gains last month were all part-time, up 82,000 in July. Full-time employment fell by 28,000.

Another weak point in the monthly jobs data was a 36,500 drop in goods-producing industries, including a net decline of 18,400 in manufacturing. All the employment gains were in services, which was up 90,500 during the month. That’s the biggest ever monthly increase in service jobs since at least 1976 and reflects higher employment in education and health.