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Forward Guidance: September Jobs Reports to Show More Gains

Jobs will be on the radar next week as labour market reports for Canada and the US are released. We expect a 50,000 increase in headline employment in Canada and a 425,000 increase in the US. The spread of the delta variant likely limited the recovery of the hardest-hit travel and hospitality sectors—which still account for the bulk of the employment shortfall versus pre-pandemic levels in both countries. While our own tracking of card transactions showed spending may have plateaued in Canada in September, it has yet to decline substantially, despite rising virus concerns. And job postings are still increasing, even as the number of unemployed workers has continued to fall.

We expect that September job gain in Canada would still leave a sizeable (~100,000) shortfall in jobs versus pre-pandemic levels. And while job vacancies are high, the concern now will be matching those unemployed workers to new positions, particularly as expanded income support programs begin to wind down. Signs of substantial pressure to lift wages has yet to emerge, but will if widespread reports of labour shortages persist.

Week ahead data watch:

  • We expect Canadian employment rose 50,000, with the unemployment rate edging down to 6.8% from 7.1% in August.
  • US employment is expected to increase 425,000, although we look for the unemployment rate to tick up to 5.3% from 5.2% on higher labour force participation.
  • We’re anticipating lower trade volumes in Canada in August, led by a drop in motor vehicle production as the global semi-conductor shortage continues to squeeze operations. Exports and imports are both expected to decline about 3%, leaving the balance little changed at around $0.8 billion.