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On Friday, Canadian employment was released. It showed a positive net change in employment of 246K during August. Analysts at CIBC, point out that the labor market is entering a new phase of the recovery where the path higher for employment is slower and potentially uneven.

Key Quotes: 

“With provincial reopening plans having largely gone as far as they will go before a vaccine is available, we will be entering a new phase of the recovery where the path higher for employment is slower and potentially uneven. That will be particularly true if Covid-19 case counts, which have been creeping up already in some areas, rise over the Autumn/Winter months.”

“The unemployment rate fell to 10.2%, from 10.9% and in line with the consensus, despite a further rise in participation. The participation rate has recovered quite quickly from its earlier lows and is now within 1% of its February levels, which should allay some fears that generous income support is discouraging people from returning to the workforce.”

“The recovery in the jobs market slowed as expected, but it wasn’t all bad news as there was a greater leaning towards full-time employment this month meaning that labour force underutilization improved more than the headline. Moreover, the further rise in labour force participation suggests that strong government income support isn’t doing much to deter people from reentering the workforce. However, with the number of unemployed classed as on temporary leave now close to prepandemic levels, and provincial reopening plans largely complete until a vaccine is available, job gains will likely be slower and more uneven from here.” 

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