November Labour Force Survey Preview: Goods vs. Services — Diverging Momentum
The service sector —which covers almost 80% of Canadian employment, and includes a wide range of industries like healthcare, retail, and transportation —has led Canadian job growth this year. Nonetheless, goods-producing industries, which include construction, manufacturing, and natural resources, also contributed to the strong start to 2019.
More recently though, momentum in the two sectors has diverged. Over the past six months, service-sector job growth has maintained a healthy pace, with gains in public-sector related industries like healthcare, education, and public administration, as well as in professional, scientific, and technical services, which includes much of the Canadian tech sector.
Meanwhile, a drop in October sent employment in goods-producing industries lower than it was in April. Manufacturing jobs accounted for most of the six-month decrease, but employment in the natural resource sector fell nearly as much despite its small size, likely reflecting recent troubles in B.C.’s forestry industry. Construction employment was more stable. A slowdown in goods industry job growth is also evident in Statistics Canada’s Survey of Employment, Payrolls, and Hours.
Perhaps these trends aren’t too surprising. Measures of Canadian economic activity over the past year like GDP growth have been stronger in the service sector, while job growth in goods-producing industries in the U.S. has also slowed. Moreover, as uncertainty spread across the global manufacturing industry over the past year, Canadian companies weren’t immune from the hit to confidence. This Friday, I’ll be keeping an eye on sectors like manufacturing and construction for how they respond after a rough October.
Brendon Bernard is an Economist at the Indeed Hiring Lab, focusing on the Canadian labour market. His research interests include analyzing how detailed trends in the job market fit in with broader developments in the Canadian economy. Brendon was previously an economist with Department of Finance Canada, where he focused on analyzing Canadian financial sector policy and the U.S. economy. He holds a Master’s in Economics from the Vancouver School of Economics at University of British Columbia, as well as a Bachelor of Arts (Honours) from Queen’s University.