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Canada Unemployment Rate to Hold Steady in September

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Statistics Canada will be releasing the high impact jobs report for September.

Economists are forecasting that Canada’s unemployment rate will hold steady at 5.7% in September. The unemployment rate rose to 5.7% in July from 5.5%. Since then, the unemployment rate has been steady at 5.7%.

On the employment change, economists are forecasting 40.2k jobs for September.

This is around half of the number of jobs created in August. The report for August saw a rather big print that beat estimates.

Therefore, it is not surprising to see that the number of jobs would moderate. It is unlikely though that the employment change will rise higher than the headline print from August.

Canada Employment Change
Canada Employment Change, August 2019

For the full year of 2019, Canada has added 304,000 jobs on a seasonally adjusted basis. Current estimates point to a possibility of this number rising even further. Since mid-2016, Canada created about 1.06 million jobs.

But despite the increase, during the same period, the equipment investment was sluggish. The data underlines the fact that hiring confidence is not that high.

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In October last year, the Canadian government introduced tax-changes. The move was seen as a way to bring back confidence into the markets.

A recent patch of economic reports from Canada points to conflicting views. But the biggest talking point has been the GDP. In July, Canada’s GDP growth was flat.

The data was a result of a decline in the oil and gas extraction industry. The sector shed 3% in July and was the biggest decline since 2016.

Canada’s Ivey PMI Falls in September

Canada’s Ivey PMI report for September revealed that the pace of economic activity slowed. This also included a weakening in the measure of employment. The Ivey PMI fell to 48.7 during the month. This was after the index rose to 60.6 in August.

Incidentally, the increase in August was the highest since October 2018.

The Ivey PMI’s gauge of employment measure fell from 52.7 in August to 49.6 in September. A reading below the 50-level of the index shows a contraction in the sector.

The data also hints at a possible lower than expected job figures today.

Inventories also fell sharply in September to 50.5, compared to 54.8 in August.

The weakening in Canada’s economic activity stands in contrast to the BoC’s view. The central bank was optimistic that the Canadian economy would pick up steam into the second half of the year.

While this was partly true, recent data indicates that the momentum is slowing. This could very well be seen from the jobs report for September. The labor market has been resilient so far. But it has also been volatile on a month to month basis.

A better than forecast jobs report could soothe investor nerves. The recent weaker GDP report is starting to raise the prospects of the BoC taking an easing stance.

Among many of the developed economies, the Bank of Canada remains the only central bank that has left monetary policy unchanged. But that could change soon if the data paints a disappointing picture.

Today’s jobs report comes amid an early close for the Canadian markets. The bond markets will be closing early into the Thanksgiving weekend and open only on Tuesday.

The jobs report comes as Canada also heads into an election. The federal election in Canada is due on October 21st.

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