A devastating assessment from Scotiabank on Canada's lousy jobs and wages data

Statscan this morning reported that Canada shed 54,000 jobs in October, mostly full-time, the biggest single-month job loss outside of a recession since 1996.

But for Scotiabank economists Derek Holt and Karen Cordes Wood, the “body count” is less important than data about hours worked and wage gains:

“Wage gains slowed again to 1.3% y/y. We maintain that this matters more than volatility in the headline body count. Swings of tens of thousands in the monthly job count matter far less than the fact that the millions of employed Canadians are just not making wage gains that are keeping up with the cost of filling their grocery carts, fueling their cars and what they're spending on other staples. This is imposing real wage reductions upon the Canadian consumer and is cause for a defensive bias toward the outlook for consumer spending particularly given structural peaks on most forms of activity in the household sector.

* The key in this report is that hours worked fell for the second consecutive month. Barring a strong gain in labour productivity in September and again in October, this points to the risk of negative prints for GDP growth for two consecutive months. Recall that GDP equals labour productivity times hours worked.

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