Canada loses 39,700 jobs in August, jobless rate climbs to 5.4%

Canada’s economy shed jobs for the third month in a row in August, losing a net 39,700 jobs, entirely in full-time work, Statistics Canada said on Friday. The jobless rate climbed to 5.4%. Analysts surveyed by Reuters had expected an increase of 15,000 jobs in August.

Employment in the goods producing sector fell by a net 13,900 jobs, largely in construction. The services sector was down by a net 25,800 positions, mostly in educational services.

NDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

“The weak headline figures may have the Bank of Canada questioning its apparent commitment to even higher interest rates. However, with the decline in education employment potentially reversing ahead, and with one more labour force survey before the Bank’s October meeting, it still seems likely that at least one more rate hike will be in store before a pause is seen.”

ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES
“I think this can be taken as a reasonable indication that the economy is, in fact, slowing. Even if jobs had come in as expected I don’t know if I would be exceptionally encouraged by that sort of number. When you look at the increase in the unemployment rate that does suggest that maybe a little bit of slack is starting to return to the labor market though it’s not a complete process and it will be a slow process. But if you’re thinking about this from a monetary policy standpoint the focus is still on bringing inflation under control. Wages did accelerate a little bit here so I don’t know if you see any respite on the inflation front. The BOC’s focus is going to remain on bringing inflation under control so I don’t see them moderating their tone at all in response to those numbers.”

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK
“I think the Bank (of Canada) will be more focused upon the wage side of the picture – the modest acceleration that we have there that’s ongoing. So I don’t think they will be overly alarmed by the weakening in the jobs reading.”

“I am little bit suspicious toward some of the quality of the numbers … a 50k drop in education at this time of the year and the concentration in youths suggest that at least some of this may be faded in terms of the job loss.”