Canada’s August Labour Numbers Find Support in Plant Usage Rates
Canadian total employment in the month of August pulled ahead by +22,000 jobs.
The year-over-year change has been a strong gain of +374,000 jobs.
The monthly average increase in employment has been three times faster year to date in 2017 than during the same January-to-August period of 2016, +27,000 versus +9,000.
Considerable volatility will often appear in Statistics Canada’s Labour Force Survey numbers. For example, full-time jobs in August were -88,000. Thankfully, part-time work more than came to the rescue, +110,000.
Year over year, full-time (+213,000) and part-time positions (+161,000) have been in better alignment.
The ‘headline’ unemployment rate in the latest month improved slightly to 6.2%, from 6.3% in July. A year ago, in August 2016, it had been 7.0%.
At 6.2%, the current jobless rate is at its lowest level since October 2008 (also 6.2%), which was just before the Great Recession broke into Canada’s house and trashed the place.
Canadian construction employment in August was +5,000, but that left the year-to-date figure at a still lowly +2,000.
Manufacturing employment north of the border in August was -12,000, lowering the year-to-date number for the sector to +48,000. Nevertheless, that’s a welcome turnaround from -40,000 recorded year to date in August 2016.
Construction’s seasonally adjusted (SA) unemployment rate is presently 7.3%, down from 9.1% in August of last year.
Manufacturing’s unemployment rate has now dipped to 3.9% compared with 5.1% 12 months previously.
(During the worst of the Great Recession, Canada’s construction unemployment rate soared to 12.3% in June 2009. Manufacturing’s level ballooned to 11.8% in May 2009.)
Comparing year-over-year job creation results for Canada with those of the U.S., as reported by the Bureau of Labor Statistics (BLS), the former is ahead with respect to ‘total’ (+2.1% versus +1.4%); ‘services’ (+2.2% versus +1.6%); and ‘manufacturing’ (+2.3% versus +1.1%), but is a step behind in ‘construction’ (+1.6% versus +3.2%).
Table 1 shows that Manitoba (4.9%) currently has the lowest unemployment rate among all provinces. B.C. (5.1%) is in second spot. B.C. (+3.9% year over year) has the speediest rate of jobs creation.
Of the +374,000 net new jobs (i.e., in nominal terms) year over year, a little over 40% of them have arisen in Ontario (+154,000). Quebec (+93,000) and B.C. (+92,000) have each accounted for about 25% of the improvement.
Statistics Canada, in its latest data release, says that if it calculated the unemployment rate according to the same stricter standards as in the U.S. (i.e., by the BLS), August’s estimate would be reduced from 6.2% to 5.3%.
|Unemployment rate||Employment (000s)|
|Province||Aug 2016||Aug 2017||Aug 2016||Aug 2017||Net||% change|
|Newfoundland and Labrador||12.4%||14.7%||235.1||220.4||-14.7||-6.3%|
|Prince Edward Island||12.0%||8.8%||71.3||73.8||2.5||3.5%|
The tightness in Canada’s labour market suggests that some capacity constraints may be starting to appear throughout the nation’s economy. The Industrial Capacity Utilization Rates, Second Quarter 2017 report recently released by Statistics Canada reveals the truth behind such speculation.
The capacity usage of Canada’s total industrial sector rose by 6.1 percentage points from Q2 2016 to Q2 2017. The climb for manufacturing was 3.6 percentage points.
Total Canadian industry now has a capacity utilization rate of 85.0%. Construction (87.7%), forestry and logging (+85.7%) and electric power (85.2%) are all a little higher.
Total manufacturing presently has an 84.2% capacity utilization rate.
Fourteen of manufacturing’s 22 sub-categories have usage rates that exceed 85.0%.
The industrial sub-sectors with usage rates of 85% or higher are shaded in blue. Historically, the 85% benchmark has carried special significance. When firms break through it, that’s when they’ll think more seriously about expanding facilities.
Also noteworthy is the fact that only three of manufacturing’s sub-sectors had percentage declines in their usage rates year over year. The nineteen others had increases.
Furthermore, in eight of those instances, the increases were outsized, of +5.0 percentage points or more.
(85% and above is benchmark for more likely capital spending)
|Q2 2016||Q2 2017||Change|
|Forestry and logging||88.9%||85.7%||-3.2|
|Electric power generation, transmission and distribution||82.3%||85.2%||2.9|
|Oil and gas extraction||73.3%||84.0%||10.7|
|Furniture and related product manufacturing||86.3%||92.7%||6.4|
|Leather and allied product manufacturing||84.8%||92.4%||7.6|
|Plastic product manufacturing||83.7%||91.5%||7.8|
|Petroleum and coal products manufacturing||81.7%||90.3%||8.6|
|Wood product manufacturing||88.1%||89.8%||1.7|
|Rubber product manufacturing||85.9%||88.0%||2.1|
|Transportation equipment manufacturing||88.1%||87.8%||-0.3|
|Computer and electronic product manufacturing||75.6%||86.8%||11.2|
|Textile product mills||69.2%||76.9%||7.7|
|Fabricated metal product manufacturing||72.6%||76.6%||4.0|
|Non-metallic mineral product manufacturing||72.8%||75.8%||3.0|
|Primary metal manufacturing||79.5%||75.6%||-3.9|
|Electrical equipment, appliance and component manufacturing||73.6%||75.1%||1.5|
|Printing and related support activities||69.3%||71.2%||1.9|