An Ambivalent Labour Force Survey

My take on today’s release follows:

Job Numbers

As Statistics Canada noted, “Employment was little changed in July.” Employment growth in Alberta and Ontario was largely offset by job losses in the other eight provinces. As a result, the Canadian labour market created 11,300 new positions in July, far fewer than in previous months.

Some commentators argue that the Bank of Canada needs to raise interest rates again in response to Canada’s “tight” labour market. Today’s moderate figures do not support this argument.

Employment Quality

Encouragingly, all of these 11,300 new jobs were full-time, paid positions. A further 8,400 part-time jobs were replaced with full-time jobs and a further 4,600 self-employed positions were replaced with positions paid by an employer.

Ontario was an exception to these national developments: the creation of 25,100 part-time jobs masked the loss of 13,700 full-time jobs. Self-employment increased more than paid employment.

Average hourly wages rose by 3.7% nationwide and by 3.0% in Ontario from July 2006 through July 2007.

Manufacturing Employment Rebounds

Canadian manufacturing employment increased by 19,600 jobs in July. This modest rebound follows a loss of 95,300 manufacturing jobs from February through June. As a result, manufacturing employment is still down by 75,700 jobs since January 2007.

Alberta Gains Service Employment

Strikingly, all of Alberta’s 13,600 new jobs were in the service sector, which tends to pay lower wages than the goods-producing sector. Alberta lost 6,900 manufacturing jobs in July.

In Alberta, both wages and prices are increasing at annual rates just above 6%. Despite talk of “labour shortages,” Alberta employers are failing to raise wages faster than prices to attract workers. As a result, real wages are stagnant in Alberta.

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