Whew. The huge upward revision in Canada's job numbers for July shows that the national labour market is not doing nearly as badly as we were led to believe a week ago.
Unfortunately, the latest rendition of the now-you-see-it, now-you-don't Labour Force Survey offers little reason to think that job creation is doing markedly better than we assumed before the statistical comedy began.
The revision put July's net employment gain at 41,700 jobs, up from the paltry 200 originally reported, but it still showed that full-time jobs are declining and hours worked are basically flat. The jobs market is being boosted by part-timers, while unemployment declined only slightly to 7 per cent because of a growing number of people looking for work.
Despite the night-and-day difference between the dismal original numbers published last week and the far more upbeat corrections released Friday, there is every reason to remain wary about what lies ahead. For nine months now, Canada has been locked in a good news/bad news cycle, in which big job gains one month give way to large job losses the next.
The new numbers, issued after Statistics Canada spotted a problem with the original version, continue that pattern, more than reversing the losses in June, but showing little sign of any incipient pressure in the labour market.
Canada's employment machine is still not cranking out enough jobs to satisfy its growing population. So far this year, the average monthly employment gain comes in "at a mediocre 13,500, less than half the growth rate in the labour force population over the same period," according to Adrienne Warren, senior economist at Bank of Nova Scotia.
Just as worrisome, the jobs that are being created are not the high-quality, full-time positions that would signal a return to fast growth and put pressure on the Bank of Canada to raise interest rates.
"Canada is becoming a nation of part-time workers," according to David Madani of Capital Economics. Part-time jobs jumped by 59,900 in July, while full-time employment slumped by 18,100.
Workers have struggled to make gains in this cautious environment and July's numbers continued that trend. Average hourly earnings advanced only 2.1 per cent from a year earlier.
"That's not leaving workers with much in the way of after-inflation income gains," wrote Avery Shenfeld of Canadian Imperial Bank of Commerce in a note to clients.
He added that the latest numbers come with an asterisk as they include a big jump in education jobs, which were up 46,000 from June. Shifts in the timing of when teacher contracts come to an end for the year are making it tougher for Statistics Canada to adjust for seasonal swings and many of those job gains could therefore be reversed in months to come.
Such statistical quirks are likely to come under increasing scrutiny in the wake of the embarrassing withdrawal of the original labour force numbers for July. But dwelling on how teacher jobs are handled by the national statistical agency underlines the fragile nature of job creation in recent months.
Policy makers hope that a potential surge in exports will lead to an outburst of hiring in the months ahead. Royal Bank of Canada economists predict that if things unfold as expected, the Bank of Canada will be in a position to bump up its key overnight rate in the second quarter of next year.
For now, though, Canadian businesses still have unused capacity and surveys show most firms could meet an unexpected increase in sales with their existing staff, according to Scotiabank's Ms. Warren.
A stronger U.S. economy is helping to boost the outlook for exports and Canadian business confidence is showing signs of improvement, but sales growth is still missing in action. "This suggests business hiring plans could remain fairly cautious for some time," Ms. Warren writes.
Ian McGugan