MNI: Canada Sept Job Gains Beat Forecast And Wages Climb 5%

Canada's job creation came in much faster than the market expected in September and wage gains continued to run around a 5% pace the central bank has said is too hot, though the job gain partly reflects volatility in accounting for contract education workers during back-to-school season. 

Employment rose by 63,800 to top all forecasts in a survey with a consensus increase of 15,000. The unemployment rate remained 5.5% for a third month, better than the forecast it would climb to 5.6%. The strength of the job gain was muted by a 71,800 increase in the labor force, reflecting continued record immigration, and Statistics Canada reiterated in Friday's report from Ottawa that it now takes about 50,000 jobs a month to keep the job market in place, about double the requirement in the recent past. 

The job gain revives views of the economy's resiliency through the Bank of Canada's 10 interest-rate increases and the prospect of inflation becoming entrenched, something officials have said would require another painful series of rate hikes. Unemployment is still somewhat close to the record low of 4.9% set last year. Worker demands for big pay hikes were underlined by a recent offer to Ford's autoworkers for a 15% raise over three years and revived talk of a contract with 1970s-style cost of living allowances. 

While some other details of the job report were mixed, the 5% wage gain remained in line with gains of 4.9% in August and 5% in July. Bank of Canada officials have cited a risk that elevated wage gains may keep inflation from returning to their 2% target, a destination they've already pushed back to mid-2025. It's another sign of sticky prices following the last inflation report showing the CPI accelerated to 4%, double the BOC's target. 

Education jobs led the increase, climbing by about 66,000. StatsCan noted that employment in the industry can be volatile around back-to-school but also that the sector has been on an upward trend over the last year.

Overall job gains were led by lower-paying part-time work that climbed by 47,900 positions. Full-time work rose by 15,800. There were a few other quirks in the report, with StatsCan noting transportation and warehousing employment has accounted for one-third of net employment growth since January, while construction work has declined 3.4% even as the government seeks to boost home-building. 

Hours worked were "virtually unchanged" in September, StatsCan said, and rose 2.6% on a year-over-year basis. Many economists see hours worked as a proxy for GDP, which declined at a 0.2% pace in the second quarter, the kind of slowdown that led the Bank to hold its key rate at 5% last month.