10/25/2012 08:51 EDT | Updated 12/25/2012 05:12 EST

Earnings Canada: StatsCan Says Pay Up 3.6% Year On Year; Job Growth Soars


OTTAWA — Canada's surprisingly strong jobs growth of the past two months got some important validation Thursday from fresh data showing employers added 45,500 workers in August.

The news comes from the seldom reported payroll survey of companies that Statistics Canada conducts in conjunction with its better known labour market survey of households, which determines the country's unemployment rate.

The employers survey showed jobs have been added in each of the last six months and at a pace almost twice that tracked by the household report.

The survey also showed that average weekly earnings of non-farm payroll employees rose 3.6 per cent in the past year — three times the current rate of inflation — to $907.19.


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"It does look strong,'' said David Madani, chief economist with Capital Economics. "I would agree this is stronger than one would expect for an economy that is growing at just under two per cent.''

In the past two months, Canada's statistical agency has surprised both markets and analysts with findings that the economy created 52,100 jobs in September, on top of the 34,300 added in August, wiping out losses the previous month.

That raised eyebrows among economists who pointed out that the labour survey is subject to wild monthly fluctuations, in part because it trusts individuals to self-report the employment status of the household.

The payroll data, called the SEPH, comes from a survey of employers. It gets less ink than the up-to-date labour market survey because it comes out about two months later, so is often treated as old news. It also does not include farm jobs and self-employment.

Scotiabank economist Derek Holt said the employer survey, although it too has an error factor, provides harder data and gives some ballast to the better known labour report.

But he added that currently both surveys appear out of step with the economy.

"There's a bit of jobs conundrum in the country right now,'' he said. ``The old rule of thumb that says, roughly speaking, jobs growth and GDP growth shouldn't stray too far apart is definitely being broken.''

"If the Bank of Canada is right and we only had one per cent growth in the third quarter, then why are we hiring all these people?''

The corollary is that the economy may not have been as weak as the Bank of Canada supposes and that the central bank may be correct in forecasting a growth spurt this quarter _ the October-December period _ that will continue to strengthen into the new year.

Madani has an opposite view, as does Holt. Both believe economic growth will stay below two per cent in 2013, against the central bank's call of a 2.3 per cent advance next year.

"There's margin of error in all these estimates,'' said Madani. ``I wish it could last because it actually (signals) pretty strong growth, but the underlying trend in the economy is just not consistent with that type of employment and average weekly earnings growth.''

The SEPH report for August found job gains in most sectors, including education, public administration, health-care and social assistance, mining and oil extraction and manufacturing. Construction jobs fell.

Average hours worked rose to 33.1 a week from 33.0 in July and 32.9 in June.

The biggest gains in weekly earrings were experienced in professional, scientific and technical services, in accommodation and food services and in construction, Statistics Canada said.

In the professional, scientific and technical services, average earnings were up 7.4 per cent to $1,273.60. Meanwhile, earnings increased five per cent to $374.54 in accommodation and food and were up 4.4 per cent to $1,144.43 in construction.

At the same time average weekly earnings in administrative and support services declined 3.2 per cent to $724.03 on an annual basis.

Earnings of non-farm payroll employees increased in every province in the 12 months to August, with above-average gains in Newfoundland and Labrador and Saskatchewan.

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