Employment data for September showed a slowing in employment in the U.S.—despite availability of jobs—while Canada returned to pre-COVID levels. Used to gauge not only short-term trends but also the overall health of the economy, the jobs reports are closely watched by analysts, investors—and central banks.
In the United States, there are several types of jobs reports. On the first Friday of every month the Bureau of Labor Statistics releases the widely known “jobs report,” estimating the number of people employed and unemployed in the economy and the number of hours worked. The non-farms payroll report is included in this data. Then there is also the monthly ADP National Employment Report, which tracks levels of nonfarm private employment. While not an official government report, ADP handles payroll for about one-fifth of all privately-employed individuals in the U.S. Interestingly, the numbers don’t always correlate. There is also the jobless benefits report, which measures weekly unemployment insurance claims. While new jobs are reported monthly, the jobless report is reported weekly and measures both first-time and ongoing claims.
September painted two different pictures for North America. In Canada, employment returned to pre-pandemic levels as the country reported a gain of over 157,000 new jobs in September, and a drop in the jobless rate to 6.9%. The print was way above the expectation of 65,000 new jobs and the country has now regained the three million jobs it lost during the pandemic.
For the United States, ADP reported that the private sector gained 568,000 jobs in September. Job growth was positive in businesses of all sizes—notably companies with over 1,000 employees added 354,000 jobs. However, the non-farms payroll showed a gain of 194,000 new jobs in September, and a fall in the unemployment rate to 4.8%, while estimates were for a gain of 500,000 new jobs. New filings for jobless benefits last week fell to 326,000, the first decline in four weeks.
While jobs are there, companies are still struggling to find workers, even though unemployment benefits have run out in many states. In terms of the prints’ effects on monetary policy, the Bank of Canada has stated it wants to see more economic improvement before it begins raising rates. And while the Federal Open Market Committee stated it would likely announce its plan to taper bond purchases at its next meeting in November, the recent report may disrupt those expectations.