Tale of two countries as one economy adds jobs and the other sheds them
Both Statistics Canada and the US Department of Labour Statistics revealed their August jobs numbers on Friday. In both cases, the results were disappointing and below analyst expectations, but to varying degrees.
Canada lost 66,000 jobs in August with the unemployment rate ticking up to 7.1 per cent. This follows a loss of 41,000 jobs in July. Economists polled by LSEG Data & Analytics before the release predicted a gain of 10,000 jobs.
The US unemployment rate also rose to 4.3 per cent, but the US actually added 22,000 jobs in August. Similarly to Canada, the US surprised to the downside with Dow Jones’ survey of economists predicting a gain of 75,000 jobs.
The US release is the first since President Donald Trump fired Erika McEntarfer, the former commissioner of the Bureau of Labour Statistics, following the release of a disappointing jobs report as well as some significant downward revisions to prior monthly numbers. The President's nominee to replace McEntarfer, who has not yet been confirmed, has previously criticized the jobs numbers as being "politically distorted."
While not subject to overt political pressure, the Canadian numbers offered a somewhat challenging picture. 26,000 jobs were lost in professional, scientific, and technical services, 23,000 jobs were lost in transportation and warehousing, and 19,000 jobs were lost in manufacturing. Construction employment, however, added 17,000 jobs in August.
Markets in both the US and Canada have begun pricing in higher likelihood of central bank rate cuts in the wake of these releases.
