Let's acknowledge the obvious: Canada's May employment report was very good. But one month does not make a trend – especially when we're talking about Statistics Canada's Labour Force Survey. When we look at the past six months – which, besides being a round-ish number, also captures the bulk of the oil price shock – we see a labour market that is moving at a snail's pace, but at least in an encouraging direction.
Statscan's May jobs report was, in many respects, eye-popping: 58,900 net new jobs in the month. Full-time jobs up 31,000. Private-sector jobs up 57,000.
If this is how we fight an oil shock, bring it on. Heck, even Alberta – oil-shock-central – added 20,000 full-time jobs in the month.
But we've said it before in this space, and it bears repeating any time Statscan releases an exceptional jobs report like this one: The Labour Force Survey contains a large margin of error. So large that perhaps we should simply call it, "Grain of Salt."
Let's review. The Labour Force Survey is, indeed, a survey of households – Statscan calls people up and asks them questions about their employment status. And like any survey, it has a margin of error. The standard error on the May employment figure is 28,700. What that means, statistically speaking, is that there is a 68-per-cent chance the actual job change for the month falls within one standard deviation in either direction. So, there are a little more than two-in-three chances that the true job growth for May was between 30,200 and 87,600 – but there's also a one-in-three chance that it was some other number outside of that range. There's a 90-per-cent probability that the actual number is within 1.6 standard errors of the reported 58,900 – so, somewhere between a gain of 13,000 jobs and 104,800 jobs.
The good news is that this almost certainly means Canada produced jobs in May, and likely a decent number of them. But the other thing to note about the LFS is how prone it has been to mood swings in recent months. Since March, we've rollercoastered from a jump of 29,000 to a slump of 20,000 to a spike of 59,000. And in the details of the reports – things like full- versus part-time jobs, public- versus private-sector hiring, self-employment – the numbers have been similarly volatile. Eyeballing the numbers from month to month, we have to wonder how big of a role those margins of error have been playing from one survey to the next. The monthly snapshots look mighty blurry.
More helpful might be to take a bigger swath of data – say, over the past six months. Not only is that a pretty reasonable time frame over which to expect discernible trends to emerge, but it also takes us back to December – approximately when the oil shock really hit Canada's economic fan. Those six months might give us a better sense of how the labour market has weathered the storm.
Over the past six months, the LFS shows Canadian employment up a total of 91,000 – or, on average, about 15,000 a month. While it's certainly nice that this number is positive, given the sense of dread surrounding the oil shock, let's keep it in perspective: The working-age population grew by an average of 23,000 a month. The employment rate – the number of people employed as a percentage of the working-age population – sits at 61.4 per cent, precisely where it was six months ago. That's barely above the Great Recession's lows, and about two percentage points below pre-recession levels.
Even with May's big gain, we're merely treading water here. The country continues to have excess labour capacity, and the meagre pace of job creation is doing nothing to reduce that.
But there are a few encouraging signs.
All the country's net job production over those six months has been in full-time positions – 107,000 in total, or nearly 18,000 a month (part-time employment has declined by 16,000 over the period). The vast majority of job creation – 73,000 jobs – has come from the private sector, evidence that business owners were expanding and hiring even amid considerable economic uncertainty.
And the labour market in Alberta has held up remarkably well. The province has actually added nearly 16,000 jobs in the past six months, including small gains in both full- and part-time employment. Job cuts do tend to lag economic shocks a little, so Alberta is far from out of the woods, but so far we haven't seen the kind of employment decimation that many people have been expecting.
So while we're not exactly on a national hiring spree, the labour market isn't in dire straits, either. Indeed, given the circumstances, its health has been holding up quite well – and the trend in full-time and private-sector hiring suggests that job quality is looking up.
That may not be as bright a picture as a 59,000-job May report paints. But all things considered, we'll take it.
Editor's Note: A previous version of this story said that May experienced the biggest one-month employment gain in more than three years, with 58,900 net new jobs. However, October, 2014, saw an increase of 62,000 new jobs.
David Parkinson