Canadian Jobs Preview: Forecasts from six major banks, employment to rise but outlook is dimming

Canada will release September employment figures on Friday, October 7 at 12:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at six major banks regarding the upcoming employment data. 

Consensus sees 20K jobs added vs. -39.7K in August, while the unemployment rate is expected to remain steady at 5.4%.

NBF

“We expect a rebound in employment after the losses recorded in June (-43K), July (-31K) and August (-40K). Our call is for a 20K increase. Despite this gain, the unemployment rate could increase from 5.4% to 5.5%, assuming the participation rate rose one tick to 64.9% and the working-age population grew at a strong pace.”

RBC Economics

“Canadian employment likely edged higher in September after three straight monthly declines. But as monetary tightening continues, that bump isn’t likely to last. The 40K drop in employment in August was largely due to a sharp 50K pullback in education employment numbers. Those seasonal distortions are expected to fade in September, fueling a 15K increase in overall employment.”

CIBC

“The 35K increase in total jobs expected for September would offset only around a third of the combined jobs lost over the prior three months. Assuming a slowdown in monthly population growth relative to August’s brisk pace, as well as a slight reduction in participation, the job gain expected would take the jobless rate down to 5.2% – historically low but still above the 4.9% mark seen in June and July.”

ING

“The jobs market has wobbled of late with employment falling for three consecutive months after some very vigorous increases earlier in the year. We are hopeful of stabilisation in Friday’s September report given the economy is still performing relatively well, but if we are wrong and we get a fourth consecutive fall then expectations for Bank of Canada tightening could be scaled back somewhat – especially after some softer than anticipated CPI prints. We are currently forecasting a 50 bps rate hike at the October BoC policy meeting with a final 25 bps hike in December.”

TDS

“We look for Canadian employment to rise by 45K in September, helped by a sharp rebound for education after a large one-off decline in August. Outside education things look less upbeat, with little underlying momentum and further weakness in the goods-producing industries. Wage growth should hold at 5.6% YoY, while the unemployment rate should edge back to 5.2%.”

Citibank

“Canada Net Change in Employment – Citi: -5K, prior: -39.7K; Unemployment Rate – Citi: 5.6%, prior: 5.4%; Hourly Wage Rate Permanent Employees – Citi: 5.6%, prior: 5.6%. The recent consistent string of job losses in Canada is expected to continue in September. In the last report for August, the ~40K decline in employment with a 0.5pp rise in the unemployment rate seemed more related to moderating labor demand. Still, it may be too soon to see sustained job losses as a result of factors like tighter monetary policy acting to cool demand – that’s more likely around the middle of next year.”