Jobs Report Worse Than It Appears

Total employment reportedly increased by 36,000 in August. This increase was entirely driven by 68,400 more jobs in educational services, which simply offset a decline of 65,300 in July. In other words, the educators that Statistics Canada counted as being “unemployed” in midsummer are now “employed.”

So, today’s Labour Force Survey confirms that July’s release was less bad than it initially appeared. However, for the same reason, August was worse than the headline number suggests. Factoring out the 68,400 “additional” jobs in education implies that employment actually decreased by 32,400.

Indeed, Statistics Canada reports that there were 39,900 fewer employees in the private sector in August. In particular, manufacturing shed a further 25,600 positions.

Despite the reported decline in unemployment among educators, total unemployment still rose by 17,800. The official total is now back above the 1.5-million mark.

Policy Implications

Today’s gloomy numbers raise more questions about Wednesday’s decision to hike interest rates yet again. The data point not to a tight labour market stoking inflation, but to a weak labour market in need of further stimulus.

In particular, job losses in manufacturing, transportation, and accommodation – as well as yesterday’s international trade figures – suggest that the high Canadian dollar is hurting export and tourism industries. The Bank of Canada repeatedly hiking interest rates, as the US Federal Reserve stands pat, aggravates this problem by putting upward pressure on the exchange rate.

The federal government’s temporary five-week extension of Employment Insurance benefits expires this month (September 2010). With more than 1.5 million Canadians still officially unemployed, the government should renew that benefit extension.

UPDATE (September 11): Quoted by Canadian Press and CanadianManufacturing.com

4 comments

  • Some points to ponder-

    – part-time continues to outpace full-time job creation 2-1 (part time in July 2008 was 3,132.4 of the 17099.4 employed or today 18.3 %- today it is 19.7%)

    – education effects tick me off! and I am sure they tick off the people experiencing the effect

    – construction sector remains seasonably high- must be a bit of housing and commercial stock under construction- is this linked to the Action plan? (or potentially the removal of all those signs, now that the stimulus is coming to an end- they sure had a whole lot of signage) With the housing correction that seemingly has been happening over the last couple months, you may see those numbers move down.

    – total unemployment count remains 1/3 higher than what it was before the recession started (1,112 in Aug 2008 and now 1,511) and a whole lot more of that employment is now part-time (part time in July 2008 was 3,132.4 of the 17099.4 employed or today 18.3 %- today it is almost 20% of total employment)

    – with the move to austerity that we hear of- you will undoubtedly stop seeing positive growth coming from the public sector which again helped this months totals from falling even further into the red.

    – self employment was up again by 20k, however if you compare it to July 2008 it has risen from 15.3% of total employment in Aug of 2008 to 15.7% today. Although I do say there were some quite large variations that occurred during the period.

  • sorry that should be 19.7 percent in the second time I quote the part time stat. I meant to delete the second reference before submitting.

  • Hmmm . . . construction sector remains high, huh? What will our numbers look like when our real estate bubble finally bursts? Should be soon, too, with interest rates on the rise and the economy still slow.

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