OTTAWA (Reuters) - The Canadian labor market lost momentum in October, a new report showed on Thursday, though traders panned the data and analysts said it did not change their outlook for job growth, which has been strong this year.
Employment decreased by 5,700 last month after 43,000 jobs were added in September, payroll processor ADP said in its first Canadian release.
ADP publishes a closely-watched U.S. private sector jobs report, though Canadian markets showed little reaction and were focused on an unexpected increase in September manufacturing sales.
The figures differed from the gain of 35,300 jobs previously reported for October by Statistics Canada. Analysts said the two reports would likely diverge on a month-to-month basis but show the same long-term picture.
While Statscan’s jobs report has been criticized in the past for large monthly swings, analysts said it was unlikely to be eclipsed by the ADP report in its importance to markets or policymakers.
ADP’s reputation for having a spotty track record of predicting U.S. jobs figures is also likely to follow it to Canada, analysts said.
“More labor market data is definitely welcome in Canada but ADP faces an uphill battle to become a widely-watched measure in Canadian markets,” said Derek Holt, economist at Scotiabank.
Jointly developed with Moody’s Analytics, ADP’s report is derived from its payrolls data of about 40,000 companies and uses a model that includes indicators such as retail sales and housing starts to estimate the monthly payrolls change.
In comparison, Statscan’s labor force report is based on a survey of about 56,000 households and is weighted to give national and provincial estimates. Where survey data are missing, previous or similar data is used.
“The methodology that Statscan uses is a little bit more robust,” said Karl Schamotta, director of FX risk and strategy at Cambridge Global Payments.
“Ultimately, that’s going to be the number that is looked to for the most accurate gauge of what’s happening in the Canadian economy.”
Statscan also produces a separate payrolls report that lags by two months, which is what ADP is trying to track.
Though the two payrolls reports show zero difference in the long-term, they have a standard deviation of 35,000, said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.
“At any given month these two will be wildly different,” Chandler said. “I don’t think we get a lot of added information from it.”
Reporting by Andrea Hopkins and Leah Schnurr; Editing by Steve Orlofsky and Paul Simao