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Analysts at TD Securities note that the Canadian employment surged by 81k in August, well above the market consensus for 20k.

Key Quotes

“Details were somewhat mixed, with a sharp pickup in private employment and softer wage growth, but this did little to take away from the robust headline print.”

“The Canadian economy added 81k jobs during the month of August, crushing expectations for more modest gains (TD: 15k, market: 20k). Part-time employment accounted for most of the jobs created, although full time employment was still up 24k and private-sector employment rebounded from a weak July with the creation of 94k jobs – not far off the record from January.”

“Inflows to the labour force helped push the participation rate for all workers up 0.2pp to 65.8% and left the unemployment rate unchanged at 5.7%. Wages were the one weak spot as a 0.6% m/m decline saw wage growth slip to 3.8% y/y from 4.5% in July. However, 3.8% is still very strong on a historical basis, and base-effects will remain favourable for the next few months due to a (cumulative) 0.1% decline in average hourly earnings from August to November 2018. Moreover, wage growth in LFS had always looked like an outlier compared to other metrics of job growth (BoC’s wage common sat at 2.7% in Q2), so some reversion was in the cards eventually.”

“This report should provide the BoC’s increased confidence in their recent messaging, which stressed the Canada has proved more resilient to global headwinds, and that monetary policy decisions will take into account these unique circumstances. We still look for the impact of headwinds to intensify into year-end but today’s report should dampen some of the speculation around a potential cut in October.”