CANADA DATA: Payrolls Employment Sees Largest Drop In Nearly Two Years [1/2]

The SEPH report for September saw the heaviest monthly decline in payrolls in nearly two years, offering a more cautious take than recent strength in the more timely household survey measure of employment. That said, it’s unlikely on its own to have further altered the BoC’s view of a “soft” labour market ahead of the Dec 10 decision, where it’s firmly priced to remain on hold with rates seen “about right”. 

• Payrolls fell -58k (sa) in September according to the SEPH report, with only a partially offsetting upward revision to 17.6k in Aug vs the 3k originally reported.
• The -58k more than reverses a two-month increase of 43.2k in Jul-Aug and sees its largest single monthly decline since Nov 2023.
• The press release notes widespread declines: “Monthly payroll employment declines were recorded in 11 of the 20 sectors, including educational services (-19,100; -1.3%), manufacturing (-9,600; -0.6%), professional, scientific and technical services (-6,400; -0.5%), real estate and rental and leasing (-5,400; -1.8%) and administrative and support, waste management and remediation services (-3,400; -0.4%).”
• “Health care and social assistance (+6,500; +0.3%) as well as arts, entertainment and recreation (+1,900; +0.6%) were the only sectors to record increases in September.”
• The payrolls data don’t directly tally with employment in the already published household survey, which saw a strong 67k in Oct after 60k in Sep, bouncing from two weak months including -66k in Aug.
• Payroll wage growth meanwhile continued its recent stabilization around the 3% Y/Y mark, with fixed weight average hourly wage growth at 3.3% Y/Y after a downward revised 2.7% (initially 3.0) in Aug and 3.0% in Jul. This measure ended 2024 at 5.9% Y/Y.
• Ahead the BoC decision on Dec 10, the report will likely have confirmed its view on the labour market from the October meeting: “Canada’s labour market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1% in September and wage growth has slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady.”