One of Canada’s top economists found the latest employment numbers “odd.” BMO chief economist Douglas Porter’s latest research note looked at employment data. Statistics Canada (Stat Can) data shows April payrolls rising, but employment falling. The agency attributed these conflicting trends to a lag in payroll, which they say is typical. Porter pulled the receipts and failed to find this behavior in prior months of data.
Canadian Payroll and Employment Data Are Showing Divergent Trends
The Canadian economy experienced a few setbacks in April, but they didn’t show up in payroll data. Payroll employment increased 167,000 (+1.0%) in April, despite renewed lockdowns. Labour Force Survey (LFS) employment shows a loss of 207,000 jobs for the same period. Both numbers show conflicting trends. Things appear to be getting better in the former, and rolling back in the latter.
“Do you feel our pain now, when we try to estimate monthly moves in Canadian employment?” wrote Kavcic. Adding, “the two StatsCan surveys can’t agree on the sign or even get within 2% of each other!”
BMO Can’t Find Evidence A Lag Occured Prior
The agency attributes the divergence to the difference in what they measure. Payroll employment is the number of people receiving a paycheque. This can happen after people are laid off. The LFS survey measures employment in real-time. They say payrolls are delayed by a month in volatile conditions like the pandemic.
“StatsCan explained the gap away by suggesting payrolls lag the LFS. The issue there is that over the past year, there has been no such lag between the two,” he said.
They also shared a chart showing little to no divergence until the most recent numbers.
“The bigger curiosity is that the jobs bounce now lifts both surveys into firmer terrain than U.S. employment, despite a much heavier GDP decline in Canada. In the most recent month available, the Canadian LFS is now down 3.0% from its prior peak, SEPH is -4.5%, and U.S. payrolls -5.0%. Odd.”
Like this post? Like us on Facebook for the next one in your feed.