Strike, floods hold back payroll earnings increases, hours worked

Flooding in Alberta and a two-week construction strike in Quebec held back employment and hours worked in June, with likely consequences for economic growth that month.

Statistics Canada reported Wednesday that average weekly earnings of non-farm payroll employees rose a modest 0.2 per cent to $919 in June, bringing the annual increase to 2.6 per cent.

Meanwhile, non-farm employment dropped 3,600 jobs while the average weekly hours worked fell a significant 0.6 per cent to 32.9 hours, both of which likely helped hold back the earnings number.

The statistical agency took note of the impact of the Quebec strike in the last two weeks of the month, noting that declines in employment, payroll and hours worked were observed in the construction sector.

As well, it said the flooding also could have had an impact on the Alberta estimates, although weekly earnings rose 3.9 per cent in the province, second only to Saskatchewan.

The Bank of Canada has estimated the twin events could have sapped 1.3 percentage points from overall gross domestic product growth in the second quarter, which ended in June.

“Overall, today’s data are consistent with the view that June will be a weak month for GDP growth and is consistent with our call for a 0.6 per cent decline in output that month,” said economist Emanuella Enenajor of CIBC World Markets.

The CIBC’s call is in line with consensus expectations that June will turn out to show the sharpest decline in economic output from the previous month of any time since the 2008-09 recession.

Not only was employment negative in both the household survey and the payroll calculation, but several other indicators also reported significant contractions during the month, in particular, manufacturing activity and retail and wholesale sales. The June and quarterly GDP numbers will be released on Friday.

Economists and the Bank of Canada are “looking through” the June result, however, as an anomaly following generally healthy increases in the winter and spring.

In its latest monetary policy report, the central bank said it expects growth to rebound strongly in the third quarter from the temporary shocks and level off at about 2.7 per cent quarterly growth next year.

Analysts also noted that the 2.6 per cent annual gain in earnings, while modest, is about twice the current inflation rate.

And gains in some industries were far stronger. Weekly earnings rose 8.1 per cent to $764 in administrative and support services and by 4.9 per cent to $1,107 in wholesale trade. In professional, scientific and technical services, weekly earnings increased 3.6 per cent to $1,273.

In contrast, weekly earnings in accommodation and food services decreased by 2.2 per cent to $362 in the 12 months to June.

Regionally, earnings on average rose the most in Saskatchewan, at 4.2 per cent, while increases in Manitoba, New Brunswick and Prince Edward Island trailed at below one per cent.
—The Canadian Press