Canada lost 42,000 jobs but the longer hours worked in August, raising implications for gross domestic product (GDP) tracking and interest rates.
While the figures suggest employers are being more restrained in hiring new staff, hours worked were up by a seasonally-adjusted 0.6% month on month, and are tracking a third-quarter gain of about 5% quarter-on-quarter SAAR. This would be the biggest gain since the fourth quarter of 2021, wrote Scotiabank vice president of economics, Derek Holt.
"The implications for GDP and the Bank of Canada are mixed but more hawkish than dovish; they won't overreact to August jobs but GDP tracking may ring alarms," Holt added, noting that GDP is hours worked times labor productivity.
However, CIBC executive director and senior economist Andrew Grantham said markets had been pricing in an earlier start to Bank of Canada hikes, but Friday's jobs data saw "these pushed back again and bond yields decline".
The new US tariffs were implemented too late in August to significantly impact this morning's labor market data, but early signs including job openings from Indeed.com have not seen a significant pullback in hiring demand, wrote RBC senior economist Claire Fan.
She continues to expect solid domestic demand that will support further labor market improvement into 2027.
The 42,000 job print missed market expectations for a 15,000 gain, and offset more than half of the 75,000 increase recorded in July. By sector, business, building & support saw the largest drop in employment, shedding 20,000 jobs.