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Surge in part-time work offsets full-time losses, helps drops unemployment rate

Last Updated Aug 10, 2018 at 2:20 pm EST

A worker walks on a construction site in Hamilton, Ont., on November 14, 2013. A rush of new part-time jobs offset a drop in full-time work last month to help Canada post a net gain of 54,100 positions and drop the national unemployment rate down to a four-decade low. THE CANADIAN PRESS/Aaron Lynett

OTTAWA – The economy generated 54,100 net new jobs last month and saw its unemployment rate fall — but the headline improvements overshadowed weaker details: a rush of new part-time, public sector positions and a drop in full-time work.

The overall July increase in jobs pushed the unemployment rate back to its four-decade low of 5.8 per cent, down from six per cent the previous month, Statistics Canada’s latest labour force survey said Friday.

But a closer look at the numbers revealed that the country gained 82,000 less desirable, part-time positions last month — and it lost 28,000 full-time jobs. The public sector made the biggest contribution to the July increase with 49,600 new jobs, while the private sector added 5,200 positions.

Average hourly wage growth, which is scrutinized by the Bank of Canada, continued its gradual cool-off last month with a year-over-year reading of 3.2 per cent. In June, it expanded 3.6 per cent and in May the figure was 3.9 per cent, which marked a nine-year high.

The total number of hours worked in July expanded 1.3 per cent, a slightly slower pace than the June reading of 1.4 per cent.

“In the wacky world of Canada’s monthly employment numbers, July came up with another head scratcher, with some big headlines but some disappointments in the fine print,” CIBC chief economist Avery Shenfeld wrote Friday in a research note to clients.

Shenfeld added that there are “lots of reasons to question just how good the data really are here.”

But overall he said the report contained a “good” set of numbers that will keep markets guessing whether the Bank of Canada will introduce its next interest rate hike in September or October. CIBC predicts the next rate increase will land in October as the central bank continues to proceed cautiously along its rate-hiking path.

Bank of Montreal chief economist Douglas Porter also wrote about the jobs numbers in a research note: “Today’s job report is a classic case of ‘nice headlines, shame about the details.’ While we would still give the overall result a passing grade, it’s tough to get overly enthusiastic.”

By industry, the goods-producing sector lost 36,500 jobs in July, with a notable loss of 18,400 positions in manufacturing and a drop of 12,300 in construction.

The services sector saw strong gains last month with a combined net increase of 90,500 jobs, which was led by 30,700 positions in health care and social assistance as well as 36,500 in education.

Both Shenfeld and Porter underlined those big gains in education as signs the July numbers are likely weaker than they look at first glance. Porter noted that, in the past, summertime education employment boosts have often been reversed in the ensuing months.

National Bank of Canada chief economist Stefane Marion wrote in a report Friday that the public sector is the “only game in town” so far in 2018. Marion’s research note was titled: “Where are the private sector jobs?”

Across the provinces, Ontario gained 60,600 jobs — all in part-time work — and the unemployment rate dropped 0.5 percentage points to 5.4 per cent for its lowest reading since July 2000. The education jobs fuelled much of the gain in Ontario, Statistics Canada said.

Employment also rose in British Columbia and Newfoundland and Labrador, while Saskatchewan and Manitoba lost jobs last month.

More women between the ages of 25 and 54 years old were working in July as the category saw a gain of 30,300 jobs.

The youth unemployment rate — representing workers aged 15 to 24 years old — fell to 11.1 per cent, down from 11.7 per cent in June. The report said the main cause of the drop was due to the fact fewer young people were looking for work.

Compared with a year earlier, overall employment was up 1.3 per cent following the addition of 245,900 jobs for an increase driven by 210,500 new full-time positions.

In an interview, Shenfeld added that “for the past year, Canadians have certainly been enjoying a very solid labour market with a low unemployment rate and that’s still true in the latest data.”

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