Macro Developments Since Sep BoC: Labour Market [2/3]

Labour: Stronger Than Expected Jobs And Wage Growth

• The two main labour reports both came in stronger than expected, adding a combined more than 100k jobs compared to the total 40k consensus, with a particularly large beat for the September report with 64k vs 20k expected.
• This has offset more of the extremely strong immigration-led population growth than expected – the increase in the unemployment rate has been limited to 5.54% from 5.47% at the time of the last meeting despite a cumulative 126k increase in the labour force.
• The Bank has explicitly put focus on wage growth for some months now, and in both reports hourly wage growth for permanent employees – the series the Bloomberg analyst survey focuses on - came in stronger than expected, at 5.2% (cons 4.7%) in August and 5.3% (cons 5.1%) in September, for an acceleration from the 5.3% known at the last decision.
• This doesn’t quite tally in the separate broader series for all employees though, which has ultimately been unchanged at 5.0% Y/Y. All said, latest trends appear to be a stalling in the unemployment rate around the 5.5% mark having quite quickly lifted from 5% through the summer, with resilient wage growth and much firmer than expected jobs growth.