MNI BOC State of Play: Wages Catching Up?

By Yali N'Diaye

     OTTAWA (MNI) - While the Bank of Canada is watching the impact of the

Canadian dollar on exports at a time the latter are weakening, it was likely

comforted by Friday's jobs report.

     The September overall job creation number was less than half the August

figure - 10,000 versus 22,200 - but details were much stronger.

     The net 10,000 increase, which marked the tenth consecutive monthly rise,

owed to the strength of full-time employment, which surged 112,000, its largest

gain since May 2006.

     Year-to-date data showed full-time has definitely taken over from part-time

as the engine of job creation, with 252,200 full time positions added since

January, compared with 37,000 over the same period in 2016. Meanwhile, 23,200

part-time positions have been shed year-to-date, while 101,300 part-time jobs

were created between January and September last year.

     Hours worked rose 2.4% year-over-year in September after a 2.2% increase in

August.

     More importantly, wages increased faster for those working, perhaps

catching up to the persistent strength of employment this year.

     Hourly wages of permanent employees were up 2.2% year-over-year in

September, up from 1.7% in August.

     Weekly average wage growth for all employees also accelerated to 2.2%

year-over-year in September, the largest increase since April 2016, and

following gains of a 1.8% in August, and 1.3% in May through July.

     And while youth unemployment is what keeps Governor Stephen Poloz up at

night, the unemployment rate for the age group of 15 to 24 years dropped more

than a full point to 10.3% in September from 11.5% in August, the lowest rate

since records began in 1976, faster than the 0.7-point decline in the

participation rate.

     Clearly, Friday's data will keep the normalization theme alive.

     That being said, the recent comments from Poloz stressing the bank's

cautious approach as it moves forward, and concerns about the appreciation of

the Canadian dollar's impact, could translate into a pause in the fall, allowing

the central bank to assess the extent of the growth slowdown in the second half

of the year.

     It would also give more time to gauge the impact on inflation for higher

wage growth and whether the latter is persisting. 

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

[TOPICS: M$C$$$]