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Canada Aug jobs gain misses estimates, jobless rate drops to 10.2%

TORONTO (Reuters) - Canada added 245,800 jobs in August, most of them full-time, and the unemployment rate fell to 10.2% as the economy continued to reopen from coronavirus shutdowns, Statistics Canada said on Friday.

Analysts in a Reuters poll had predicted a gain of 275,000 jobs and for the unemployment rate to fall to 10.1% from 10.9% in July.

STORY:

Market reaction: CAD/

LINK:here

COMMENTARY

ANDREW GRANTHAM, SENIOR ECONOMIST AT CIBC CAPITAL MARKETS

“The labour market recovery continued in August, but the going is getting tougher. Unlike the prior month, there was a greater leaning in towards full-time job gains than part time ones in August. Meanwhile there was a further decline (almost 260,000 or 15%) in the number of persons working less than half their usual hours. The participation rate has recovered quite quickly from its earlier lows and is now within 1% of it’s February levels, which should allay some fears that generous income support is discouraging people from returning to the workforce. Given these points, the details of today’s report are perhaps a little stronger than the headline suggests.”

“However, there’s no mistaking that the overall jobs count is still 1.1 million below it’s February level. And with provincial reopening plans having largely gone as far as they will go before a vaccine is available, we will be entering a new phase of the recovery where the path higher for employment is slower and potentially uneven. That will be particularly true if Covid-19 case counts, which have been creeping up already in some areas, rise over the Autumn/Winter months.”

DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS

“Given the range of forecasts around this number I would call this on consensus. I don’t think there was a big surprise here. We are seeing some, as expected, cooling down in decent job gains. Still quite robust though. We’ve got a long way to go to before we make up the deep losses that we saw in March and April. But this is another big step in the right direction. Of course, it’s going to take a few more months of this. Probably what we’re going to see is further notable slowdown in the months ahead.”

“I think it’s going to be a relatively quiet meeting next week (for Bank of Canada). I think it’s going to be a caretaker meeting, unless there’s some huge surprise there. I think the meeting next week will just be assessing the early stages of the recovery. It’s quite clear that policy is going to be super stimulative for an extensive period of time. I don’t think the Canadian numbers change that.”

“I will point out, just as a side bar, that we are seeing quite a back up in long-term bond yields, largely as a result of the U.S. numbers. The big drop in the unemployment rate there. I expect that’s going to get reversed later in the day. But I think the Canadian markets are being a little bit overwhelmed by what we’re seeing in the U.S.”

RYAN BRECHT, SENIOR ECONOMIST AT ACTION ECONOMICS

“Overall, a roughly as expected report that supports recovery story but also highlights the long journey faced by the economy to return to pre-COVID levels of employment and production. The BoC’s announcement next week is expected to reveal no change in rates and a reiteration of the whatever it takes policy outlook that is shared by the core central banks.”

DEREK HOLT, HEAD OF CAPITAL MARKETS ECONOMICS AT SCOTIABANK

“Pretty good on both sides of the border ... the Canadian numbers, all the details seem to be pretty decent.”

“I think they (the Bank of Canada) will be encouraged that this is another piece of the V-shaped evidence, but they’ll still say there’s a long winding road to full recovery.”

Reporting by Fergal Smith in Toronto and Allison Lampert in Montreal; Editing by Denny Thomas

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