MNI Analysis:Canada Nov Wage Growth Accelerates, 3Q GDP Slows>

By Yali N'Diaye

     Ottawa (MNI) - Employment in Canada surprised on the upside once 

more, as the economy added 79,500 jobs in November, far more than the 

10,000 gain expected by analysts and the largest increase since April 

2012, data from Statistics Canada showed Friday. 

     The unemployment rate dropped 0.4 percentage points, the largest 

monthly decrease since November 2005, reaching 5.9%, its lowest level 

since February 2008. Analysts in a MNI survey had expected the 

unemployment rate to tick down to 6.2%. 

     Overall details were strong, supporting the scenario of a growth 

rebound after a slowdown in the third quarter confirmed by data Friday, 

with the potential to push the Bank of Canada off the sidelines earlier 

than expected. 

     Statistics Canada reported that annualized real GDP growth slowed 

to 1.7% in the third quarter, slightly below the Bank of Canada's 

expectation of a 1.8% increase, and following a 4.3% surge in the second 

quarter that was revised down from 4.5%. 

     Analysts in a MNI survey had expected GDP growth to come in at 

1.7%, so the report was no surprise. The BOC projects a 2.5% rebound in 

the fourth quarter. 

     The surprise came from the labor market, which kept adding jobs at 

a solid pace, with wages contiuing to take off from a dip in April this 

year. 

     Year-to-date, the Canadian economy has added 31,300 jobs on average 

each month, including 33,700 in full-time positions. Between January and 

November 2016, the monthly average employment gain was 16,600, including 

200 for full-time jobs, making 2016 one of the slowest years for 

full-time employment. 

     The share of part-time workers in total part-time employment 

declined to 21.3% in November from 23.2% a year earlier. 

     In November, when the participation rate remained unchanged at 

65.7%, full-time employment was up 29,600 and part-time up 49,900. 

     In addition to the lagging wage growth relative to the pace of 

economic activity, the BOC has been concerned over the weakness in youth 

employment. 

     But in November, the age group was among those benefitting from 

jobs gains, with employment up 30,200, and the youth unemployment rate 

down to 10.8% from 11.1%. 

     Jobs gains were recorded in both goods-producing industries 

(+37,400) and services (+42,100). 

     Within the goods sector, manufacturing added another 30,400 jobs, 

the largest gain since March 2002, and construction 16,200. 

     In services, trade was up 38,800 and educational services up 

20,700. 

     Another sign of the strength of the labor market and the increasing 

confidence of businesses, employment gains were led by the private 

sector, with a 72,400 increase, the largest since October 2014. 

     In addition, the number of employees rose 83,000, the large rise 

since April 2012, while self-employment, considered less stable, 

decreased 3,500. 

     On the GDP front, the third quarter slowdown was mostly due to a 

2.7% drop in exports over the quarter, as well as a 0.4% contraction in 

residential structures investment, in line with the weakness in the 

resale housing market. This was the second consecutive quarter of 

housing investment decline, which had not been seen since the first 

quarter of 2013. 

Overall, exports trimmed the annualized GDP growth rate by 3.4 points, 

and residential structures by 0.1 point.

     Conversely, household final expenditure remained the largest 

positive contributor, adding 2.2 points to GDP, despite a slowdown over 

the quarter, as household consumption increased 1.0% (+4.0% annualized) 

after a 1.2% gain in the second quarter. 

     Also boosting GDP growth were business inventories, the 

accumulation of which reached C$17.2 billion in the third quarter, the 

largest since the first quarter 2014. Business inventories added 1.1 

point to the annualized GDP growth, which was 1.706% unrounded. 

 --MNI Ottawa Bureau; email:yali.ndiaye@marketnews.com 

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