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Payroll data shows modest gains in Canadian labour market

Workers are seen at the Eglinton Crosstown West Launch Shaft in Toronto. New payroll data from Statscan shows that Canada’s labour market is making modest gains.

Kevin Van Paassen/The Globe and Mail

Thursday morning's payroll survey from Statistics Canada should help firm the view that the country's labour market is headed in the right direction – but also that some of the most impressive recent numbers may have been greatly exaggerated.

Statscan's monthly survey of employment, payrolls and hours, or SEPH, doesn't attract the same popular attention as the monthly labour force survey, but many economists consider it a more valuable and accurate measure of the state of the labour market, as it relies on actual business payrolls and Canada Revenue Agency payroll-deduction data as the basis for its conclusions. (The labour force survey that gets all the press is, essentially, a telephone poll asking people about their own personal employment situation.)

The SEPH for May found that total non-farm employment rose 8,500 in the month – a modest positive, but nowhere near the massive 95,000 reported in the May labour force survey. For economists who suspected the May LFS was a statistical aberration (as surveys can be from time to time), to quote Joe Jackson, "there goes your proof."

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"The SEPH has been more steady than the LFS in recent months in terms of job creation," wrote National Bank Financial senior economist Krishen Rangasamy in a research note. He noted that the SEPH indicates average job creation for the year to date of roughly 10,000 per month, about the same rate as it shows for the past 12 months. The LFS, by contrast, has averaged a very "choppy" 3,000 per month for the first five months of 2013, but a much stronger 18,000 per month over the past 12 months.

"Regardless, both surveys point to continuing job creation, albeit at soft pace according to the SEPH (consistent with the relatively soft economy)," he said.

Meanwhile, wage growth accelerated in May, a distinct positive for the personal consumption, a key driver of economic growth. Average weekly earnings were up 0.9 per cent in May, the biggest month-over-month rise in 19 months. on a year-over-year basis, weekly wages were up 2.5 per cent.

"With May's gains, wage earnings are on track to grow at an annualized pace of 2.1 per cent in Q2, an acceleration from the prior quarter's flat print," Mr. Rangasamy said. "So disposable incomes, which were relatively soft in Q1, may have picked up steam in Q2 … largely explaining the strong retail results observed in that quarter."

So who is seeing their earnings grow the most? By major sector, it's construction, zipping along at 6.2 per cent year over year, reflecting the strong employment conditions in the sector over the past year. The biggest wage laggard was in educational services (down 0.6 per cent for the 12 months), reflecting government belt-tightening affecting elementary and secondary-school teachers. Wage growth was also weak in retail (up 0.2 per cent) and manufacturing (up 0.6 per cent).

By province, the wage leader is Alberta – still among the strongest economies in the country – where average weekly earnings were up 4.9 per cent from a year earlier. Saskatchewan is close behind at 4.8 per cent. The weakest provincial wage growth over the past year has been in Quebec (up 1.2 per cent), New Brunswick (up 1.2 per cent) and Ontario (up 1.8 per cent).

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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