Today’s labour market report was always going to be difficult to unpack. Was the slowdown in the labour market recovery a product of the 28-day lockdown in Quebec and Ontario, or is this part of the natural slowdown in the recovery expected in this phase of the recovery.
The easiest answer is that it was a combination of both, but employment gains still managed to outstrip the market’s expectations. The key to dissecting the report was if there were any geographical discrepancies in the employment data, which was apparent with the 48,000 job losses in the accommodation and food services industry, mostly in Quebec.
Employment rose by only 0.5% nationally in October, with provinces such as Ontario experiencing employment growth of only 0.4% and Quebec experiencing little job growth – its unemployment rate actually rose by 0.3 percentage points to 7.7%.
This highlights that the slowing nature of the employment gains isn’t necessarily representative of that driven by the slowdown in the recovery, but instead exaggerated by the provincial lockdowns.
This is a positive given Ontario is exiting lockdown measures over the coming weeks with Quebec set to exit restrictions in three weeks, meaning the projected slowdown in the recovery may receive a tailwind in the coming months from the jobs market.
The market reaction was limited as the positive surprise in jobs data was offset by a positive surprise in the US Nonfarm payroll data also. Additionally, markets continue to focus on the results of the US election, especially as key swing states start to show the final results.
Author: Simon Harvey, FX Market Analyst