Forward Guidance: September Jobs Reports to Show More Gains

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Jobs will be on the radar next week when labor market reports for Canada and the United States are released. We expect a 50,000 increase in primary employment in Canada and a 425,000 increase in the United States. The spread of the delta variant has likely limited the recovery of the most affected travel and accommodation sectors – which still account for most of the employment gap against pre-pandemic levels in both countries. While our own tracking of card transactions showed that spending may have increased in Canada in September, it was still much lower, despite growing problems with viruses. And jobs are still rising, even as the number of unemployed workers continues to decline.

We expect that a September job in Canada would still leave a considerable (~ 100,000) shortfall in jobs against pre-pandemic levels. And while jobs are high, the concern will now be to match those unemployed workers to new jobs, especially when expanded income support programs begin. Signs of great pressure to raise wages are not yet appearing, but will appear if extensive reports of labor shortages continue.

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Pre-week data viewing:

  • We expect Canadian employment to grow 50,000, with the unemployment rate down to 6.8% from 7.1% in August.
  • U.S. employment is expected to increase by 425,000, although we are looking for unemployment to grow to 5.3% from 5.2% on higher labor force participation.
  • We anticipate lower trading volumes in Canada in August, driven by declining motor vehicle production as the global semiconductor shortage continues to put pressure on operations. Exports and imports are both expected to decline by 3%, leaving the balance slightly altered by around $ 0.8 billion.

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