Labour Force Survey, August 2024

Economic

Summary:

Employment was little changed in August (+22,000; +0.1%) while the employment rate decreased 0.1 percentage points to 60.8%. The unemployment rate rose 0.2 percentage points to 6.6%.

Little overall change in employment in August

Employment was little changed in August (+22,000; +0.1%), as gains in part-time work (+66,000; +1.8%) were largely offset by a decline in full-time work (-44,000; -0.3%). This was the fourth consecutive month of little overall employment change.

The employment rate—the proportion of the population aged 15 and older who are employed—decreased by 0.1 percentage points to 60.8% in August, the fourth consecutive monthly decline and the 10th decline in the past 11 months. On a year-over-year basis, the employment rate was down 1.2 percentage points in August, as employment growth (+1.6%) was outpaced by growth in the population aged 15 and older in the Labour Force Survey (LFS) (+3.5%).

The number of private sector employees rose by 38,000 (+0.3%) in August, largely offsetting a similar-sized decrease in the previous month (-42,000; -0.3%). The increase in private sector employment in August was the first since April. Public sector employment and self-employment were both little changed in August.

Year-over-year employment growth concentrated among core-aged men and women

In August, employment grew by 20,000 (+0.3%) among core-aged women (25 to 54 years old) and held steady across other major demographic groups.

Employment growth in the 12 months to August was concentrated among people in the core working age. While employment was up on a year-over-year basis for men (+207,000; +3.0%) and women (+115,000; +1.8%) aged 25 to 54 in August, it was virtually unchanged among youth (15 to 24 years old) and people aged 55 and older.

On a year-over-year basis, the employment rate was down for youth as well as for people in the core working age in August. Declines were larger for young men (-4.5 percentage points to 52.3%) and young women (-3.5 percentage points to 55.2%), reflecting relatively strong population growth and virtually no employment growth for the youth population.

Unemployment rate increases to 6.6% in August

The unemployment rate rose 0.2 percentage points to 6.6% in August, after holding steady in July. The unemployment rate in August was the highest since May 2017, outside of 2020 and 2021, during the COVID-19 pandemic. The unemployment rate has generally trended up since April 2023, rising 1.5 percentage points over this period.

There were 1.5 million unemployed people in August 2024, an increase of 60,000 (+4.3%) from July and an increase of 272,000 (+22.9%) from August 2023.

Among those who were unemployed in July, 16.7% had transitioned to employment in August (not seasonally adjusted). This was lower than the corresponding proportion in August 2023 (23.2%), an indication that unemployed people may be facing greater difficulties finding work.

Unemployment rate rises for core-aged and older men in August

In August, the unemployment rate rose for men aged 25 to 54 years old (+0.4 percentage points to 5.7%) and for men aged 55 and older (+0.4 percentage points to 5.5%), while it was little changed for other major demographic groups.

Although the unemployment rate was up across all age groups on a year-over-year basis in August, the increase was largest for youth (+3.2 percentage points to 14.5% in August). The rate was up for young men (+3.8 percentage points to 16.3%) and young women (+2.6 percentage points to 12.6%).

For core-aged people, the unemployment rate was up 0.9 percentage points to 5.4% on a year-over-year basis in August. Increases for this age group were observed across all levels of educational attainment. On a year-over-year basis, the unemployment rate was up in August for core-aged people with a high school diploma or less (+1.5 percentage points to 8.2%), for those with some post-secondary education below a bachelor's degree (+0.7 percentage points to 5.5%) as well as for those with a bachelor's degree or a higher level of education (+0.9 percentage points to 6.2%) (not seasonally adjusted).

Difficult summer for students seeking employment

From May to August, the LFS collects labour market data on youth aged 15 to 24 who were attending school full time in March and who intend to return to school full time in the fall. With data for August now available, it is possible to examine the labour market situation of returning students in 2024, over the entire four-month summer period (not seasonally adjusted).

On average from May to August 2024, the unemployment rate for returning students aged 15 to 24 was 16.7%, up from 12.9% in 2023. The unemployment rate for the summer of 2024 was the highest since 2012 (when it was 17.6%), excluding the summer of 2020.

The unemployment rate of returning students over the summer months of 2024 was up for both young men (+4.5 percentage points to 18.1%) and young women (+3.3 percentage points to 15.5%) compared with the same period in 2023.

The unemployment rate increased for returning students across all age groups in the summer of 2024 compared with the summer of 2023. Among the youngest—those aged 15 and 16—more than one-quarter (27.0%) were unemployed this summer (up from 22.1% in 2023). For returning students aged 17 to 19, the unemployment rate was 17.7%, up from 12.5% in 2023. For older returning students—those aged 20 to 24—the unemployment rate was 11.1%, up from 8.3% in 2023.

The summer job market in 2024 was particularly difficult for returning students aged 15 to 24 who were part of the three largest racialized groups. Among Black returning students, the unemployment rate was 29.5% on average from May to August 2024. This represents an increase of 10.1 percentage points compared with the same period in 2023. The unemployment rate was also up in the summer of 2024 among Chinese students who intended to return to school full time in the fall (+7.4 percentage points to 22.4%) and their South Asian counterparts (+5.1 percentage points to 21.5%).

Employment up in educational services and health care and social assistance, while falling in "other services" and professional, scientific and technical services

In August, employment rose by 27,000 (+1.7%) in educational services, the first increase since January. There were 75,000 (+5.1%) more people employed in this sector compared with 12 months earlier.

In health care and social assistance, employment increased by 25,000 (+0.9%) in August. In the 12 months to August, employment gains in health care and social assistance (+157,000; +5.8%) were the largest of any sector and accounted for nearly half (49.6%) of total net employment growth.

Year-over-year employment growth in health care and social assistance was recorded both in the private sector (+94,000; +8.6%) and in the public sector (+77,000; +6.1%). Self-employment in health care and social assistance was little changed over the period (not seasonally adjusted).

In August, employment decreased in "other services" (which includes personal and repair services) (-19,000; -2.3%) following five months of little change.

Employment also fell in professional, scientific and technical services (-16,000; -0.8%) in August. Despite the monthly decline, employment in the industry was up by 47,000 (+2.5%) on a year-over-year basis.

Unemployment rate rises in most of the large census metropolitan areas

Among Canada's 20 largest census metropolitan areas (CMAs), based on the size of the LFS population aged 15 and older, Windsor posted the highest unemployment rate at 9.2% in August, followed by Edmonton (8.6%) and Toronto (8.0%). Unemployment rates were lowest in the Victoria (3.3%) and Québec (4.0%) CMAs (three-month averages).

On a year-over-year basis, the unemployment rate rose in nearly all 20 of the largest CMAs, with the biggest increases in Windsor (+3.2 percentage points to 9.2%), Oshawa (+2.5 percentage points to 7.8%) and Edmonton (+2.4 percentage points to 8.6%) (three-month averages).

In the spotlight: Recent immigrants see little change in their average hourly earnings in August and are less likely to believe they are paid appropriately

On a year-over-year basis, average hourly wages for all employees increased 5.0% (+$1.69 to $35.16) in August, following increases of 5.4% in June and 5.2% in July (not seasonally adjusted).

Wage growth varied across different population groups. For recent immigrants (who had landed in Canada within the previous five years), average hourly wages were little changed at $30.59 (-1.3%) on a year-over-year basis in August. Among more established immigrants (who had landed in Canada more than five years earlier), average hourly wages rose 6.3% in the 12 months to August (+$2.15 to $36.15).

In comparison, Canadian-born employees saw their average hourly wage increase by 6.0% (+$2.04 to $35.83 per hour) over the same period.

In August, the LFS included additional questions about the extent to which workers were satisfied with their pay and felt that they were paid appropriately, considering their efforts and achievements.

The results show that the majority of employees aged 15 to 69 either strongly agreed (22.8%) or somewhat agreed (39.8%) that they were paid appropriately in their job. More than 7 in 10 employees (72.5%) who had hourly wages in the top quartile of the wage distribution strongly or somewhat agreed that they were paid appropriately, compared with fewer than 6 in 10 (56.5%) among those with wages in the bottom quartile of the wage distribution.

In August, more than one-third of employees who were recent immigrants (35.1%) had hourly wages in the lowest quartile of the wage distribution, compared with less than one-quarter for their Canadian-born counterparts (23.5%).

The proportion of recent immigrants who somewhat or strongly agreed that they were paid appropriately (57.3%) was lower than the corresponding proportions for both employees born in Canada (64.0%) and more established immigrants (60.2%).

To stay updated on all economic events of today, please check out our Economic calendar

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Alex

Energy

Commodity

Morgan Stanley reduced its Brent crude price forecasts for the second time in a matter of weeks, as demand challenges mount while supplies remain plentiful.

The global benchmark will average US$75 (RM327.69) a barrel in the fourth quarter, according to a note from analysts including Martijn Rats. That compares with an earlier projection of US$80 between October and December, which was issued just last month in a cut from the prior outlook for US$85. Predictions for most of next year were also pared back slightly.

Brent recently tumbled to the lowest close since late 2021 as sustained concerns about weaker Chinese demand fused with signals that the US economy may be slowing. At the same time, output remains ample, forcing Opec+ to defer a plan to relax its own production curbs.

“The recent trajectory of oil prices has similarities to other periods with considerable demand weakness,” Rats and his colleagues said in the report on Monday. Time spreads — price comparisons along the futures curve — indicated the coming of “recession-like inventory builds”, although it was too early to make this the bank’s base case, they said.

Morgan Stanley’s rethink about the outlook has been echoed by concerns at other leading banks. Goldman Sachs Group Inc pared its view last month, while more recently Citigroup Inc said the market looked oversupplied and prices could average US$60 a barrel in 2025 unless Opec+ cut deeper.

Brent — which sank almost 10% last week — traded near US$72 a barrel on Monday, with major commodity trader Trafigura Group telling an industry conference in Singapore that the price was set to drop into the US$60s in the near future.

Source: Theedgemarkets

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Kevin Du

Forex

Gold remains at the back foot at the start of the week, after last Friday’s 0.8% drop and a weekly close below $2500.

The metal’s price was deflated by US labor data on last Friday, as employment increased below expectations but unexpected drop in jobless rate cooled fears about stronger weakness in the labor sector, contributing to bets for Fed’s rate cut by 0.25% rather than more aggressive approach with 50 basis points cut.

Markets shift focus towards release of US inflation data for August, due later this week, which will provide more details about Fed’s decision in September’s monetary policy meeting.

On the other hand, the yellow metal remains underpinned by growing concerns about the situation in the US economy, as well as persisting geopolitical tensions, which adds to scenario of prolonged consolidation before the price resumes higher.

Technical picture remains bullish overall despite daily studies somewhat weakened, with larger bullish bias to stay intact while the price holds above three-week range floor at $2470 zone.

Three consecutive weekly Doji candles point to strong indecision and signal prolonged sideways mode, with mixed daily studies (14-d momentum turned negative, stochastic and RSI remain in positive territory, MA’s in mixed configuration) contributing to current picture.

Technical studies still favor scenario of $2470 pivot holding dips and offering fresh buying opportunities however, fundamentals are likely to play a key role and to gold’s key driver in the near term.

In case $2470 support is lost, stronger pullback towards $2431 (rising 55DMA) and $2400/$2390 zone (psychological / 100DMA) in extension, could be likely scenario.

Conversely, bulls may strengthen grip if the price returns and stabilizes above $2500 level and shift focus towards new all-time high at $2531, violation of which to spark fresh acceleration higher.

Res: 2500; 2505; 2523; 2531.

Sup: 2485; 2474; 2470; 2457.

Source: ACTIONFOREX

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Warren Takunda

Economic

Last week, we reported September is historically a month in which global equities fall, which can keep the Pound-Dollar and Pound-Euro exchange rates under pressure in the coming three weeks. However, we also pointed out that supportive UK interest rate expectations can limit the downside.

We think price action is verifying this, and any further selling pressure in the Pound to Euro exchange rate (GBP/EUR) should be limited at the first support zone of 1.1815 and then 1.18 (both of which proved supportive during the June-July spell of weakness).

Pound to Euro Week Ahead Forecast: Pressured Ahead of Wage & GDP Data_1

Above: GBP/EUR at daily intervals.

GBP/EUR has dipped below its short-term nine-day moving average, a level that has some useful predictive power for this particular exchange rate: we note that when it breaks below here, it can typically spend up to two trading weeks below it. This will limit recoveries to 1.1862.

A test of the 1.1815 and 1.18 support zones can happen if this Tuesday's UK jobs report is much weaker than expected. The market looks for employment to have risen 84K in the three months to July, with the unemployment rate at 4.1%.

However, it will be the job figures that will potentially be of more significance for the Pound as this is something that Bank of England will be watching closely. The Bank is not expected to cut rates again, but there is some debate over whether they will move again in October and November.

A weaker-than-forecast wage print could boost these odds, which will weigh on the Pound. Average earnings is predicted to have risen by 4.1% in the three months to July, down from 4.5%. Wage pressures have been coming down, but some economists are concerned that they are not coming down fast enough.

If this is the case, then the data can beat expectations and lower the odds of an October rate cut, which can boost the Pound against the Euro and other currencies. "Another decline in nominal pay could ease UK inflation fears and allow the BOE to cut rates later this year, although we still believe that they will cut rates at a slower pace than the ECB and the Federal Reserve," says Kathleen Brooks, an analyst at XM.com.

For Pound-Euro, we think any strength will be limited owing to the febrile global sentiment backdrop and look for gains to struggle to make it beyond 1.1882. Note, the exchange rate has not closed above here since July and recent attempts to break and record a daily close above this level have failed.

From a technical perspective, therefore, the data should determine at which end of the 1.1882-1.1815 spectrum the exchange rate trades, and we place low odds of a sustained break on either side of these levels.

Wednesday will see the release of UK GDP figures for July, with the market looking for 0.2% growth, up from the previous month's flat 0% outturn. On paper, the GDP figure is secondary to the wage release, but any sizeable surprises (i.e. more than 2pps) can shake the market, with Sterling likely to weaken on any disappointments and rise on any surprising strength.

Note too that the U.S. monthly inflation release is due later in the day, and given the importance of global drivers, this could ultimately prove to be the highlight of the week for Pound exchange rates. Should U.S. inflation undershoot forecasts, market expectations for a 50 basis point rate cut at the Federal Reserve on September 18 will increase, boosting equity markets and supporting Pound-Euro.

However, should the data come in stronger, expect further selling pressures as the odds of a 50bp cut are completely erased, in which case stocks and the Pound can come under further pressure.

Last week, we heard from an influential member of the Federal Reserve's rate-setting committee that although rates need to come down, the path of progress remains dependent on the data. Markets read this as a signal that the Fed is not concerned enough to pursue 50bp cuts and will prefer to stick to more conventional 25bp increments. There is more room for the market to adjust to this view, which would mean softer equity markets, a firmer dollar and a downside bias in the Pound.

Source: Poundsterlinglive

To stay updated on all economic events of today, please check out our Economic calendar

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Kevin Du

Thailand will distribute 145 billion baht (US$4.2 billion or RM18.63 billion) of its "digital wallet" handout programme earlier than scheduled to support vulnerable groups, a deputy finance minister said on Monday, stressing the need for short-term economic stimulus.

In remarks during a budget debate in the Senate, Julapun Amornvivat said the government has prepared 450 billion baht (US$13.29 billion) in total for its signature handout programme, which seeks to stimulate economic activity by transferring 10,000 baht to 50 million Thais to spend in their localities.

The measure, which was scheduled for rollout in the last quarter of this year, is the cornerstone of Thailand's plans to jumpstart Southeast Asia's second-largest economy, which grew 2.3% in the second quarter.

A change in government last month, caused by a court's shock removal of Srettha Thavisin as premier, has left uncertainty about when promised stimulus measures would commence.

Part of the handout will now be in cash, Srettha's ally and successor, Paetongtarn Shinawatra said last week.

Finance official Julapun said 32 million people had registered so far for the programme including vulnerable groups, but not those without smartphones, through which funds were due to be received via an application.

It was not immediately clear the first tranche of payments, which Julapun said would be made later in September and would be from the 2024 budget and other sources, would be in cash.

His remarks come after Paetongtarn, the daughter of politically influential billionaire Thaksin Shinawatra, at the weekend promised to stimulate the economy right away and follow through on Srettha's policy agenda.

Her new government published a policy statement on Sunday that Paetongtarn will deliver to parliament later this week.

The handout scheme has been criticised by economists including two former central bank governors as fiscally irresponsible. The government rejects that, but has struggled to find sources of funding.

It insists the policy is necessary to energise the economy, which the central bank expects to grow just 2.6% this year, up from 1.9% in 2023 and far adrift of most regional peers.

Source: Theedgemarkets

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ING

Commodity

Energy – Saudis cut OSP

Despite OPEC+ delaying its supply increase by two months, oil prices still had a weak finish to trading last week. ICE Brent settled 2.24% lower on Friday, leaving it just above US$71/bbl. Demand weakness and a soft oil balance in 2025 are still clearly a concern. While OPEC+ cuts leave the market a bit tighter for the remainder of this year, this doesn’t resolve the surplus that is expected next year. However, prices are trading stronger in early morning trading today.

Unsurprisingly, speculators reduced their positioning in oil. Speculators cut their net long in ICE Brent by 38,427 lots over the last reporting week to leave them with a net long of 41,645 lots. This move was predominantly driven by fresh shorts entering the market. The gross short in ICE Brent is relatively large, standing at 143,759 lots. This large short leaves the market vulnerable to a short covering rallying with the right catalyst, although clearly sentiment is still very negative. In NYMEX WTI, speculators also cut their net long, reducing their position by 61,659 lots over the last reporting week to 124,868 lots.

Saudi Arabia cut its official selling prices (OSP) for all grades to all regions, highlighting concerns over the demand picture. The Saudi’s flagship Arab Light into Asia was cut by US$.70/bbl to US$1.30/bbl over the benchmark, the weakest level since November 2021.

The recent weakness in the market is very much going to be the key talking point at the APPEC week, which gets underway in Singapore this week. Weak Chinese demand is likely to dominate discussions, along with the broader weakness in refinery margins around the globe. This will naturally lead to discussions over what options OPEC+ has to try to stabilise the market. This is something that will become increasingly more difficult next year unless OPEC+ takes action to address the expected 2025 surplus. The US election and its potential impact on the oil market will likely be another theme discussed. A Trump victory could see a more hawkish US stance taken against Iran, potentially providing the opportunity for OPEC+ to unwind voluntary cuts next year.

In addition to APPEC week, which is likely to provide a lot of noise over views on the oil market, there will also be a number of data releases this week. OPEC will release its monthly oil market report on Tuesday and the market will be watching closely to see if the group makes any further revisions lower in its demand forecasts. China will also release its first batch of trade data for August on Tuesday, which will provide some more insight into how Chinese oil demand is performing. Cumulative imports over the first seven months of the year are already down 2.4% year-on-year. The EIA will release its Short Term Energy Outlook on the same day, which will include its outlook for the global market and the latest US crude oil production forecasts. Then on Thursday, the IEA will release its monthly oil market report, where it will share its outlook for the remainder of this year and 2025.

Metals – China's metal exchange stocks decline

Shanghai Futures Exchange (SHFE) inventory data shows that weekly inventories for all base metals (except for lead) fell over the reporting week. Copper stocks fell by 26,371 tonnes for a ninth consecutive week to 215,374 tonnes. This was the biggest weekly decline since March last year, taking total inventories to the lowest level since March. Meanwhile, aluminium inventories decreased by 3,973 tonnes to 285,947 tonnes. Zinc and nickel stocks fell marginally over the week. In contrast, lead inventories rose by 18% week-over-week to 30,525 tonnes.

The latest positioning data from the CFTC shows that speculators decreased their net long in COMEX copper by 4,368 lots to 14,552 lots as of 3 September 2024. In precious metals, managed money net longs in COMEX gold decreased by 10,228 lots to 226,590 lots over the last reporting week. Similarly, speculators decreased net longs of silver by 8,781 lots to 26,501 lots as of last Tuesday.

Agriculture – Cocoa strengthens on declining stockpiles

US cocoa futures extended gains last Friday on declining stockpiles at the exchange due to poor harvests from top producers (Ivory Coast and Ghana). As per recent data, warehouse inventories in the US have been declining consistently since 11 July and fell by 31.8k bags (145lb) to 2.42m bags (145lb) as of 5 September 2024, the lowest since January 2009. Earlier, the International Cocoa Organisation raised its supply deficit estimates to 462kt for the current season. However, the broader expectation is that the supply situation will improve in the 2024/25 season.

The latest data from the International Coffee Organisation (ICO) shows that global coffee exports stood at 11.3m bags in July, up 12.2% YoY. This includes Arabica exports of 7m bags (+15.8% YoY) and Robusta exports of 4.3m bags (+ 6.7% YoY). This leaves shipments between October 2023 and July 2024 at 115.01m bags, up 10.5% YoY.

The latest data from Ukraine’s Agriculture Ministry shows that grain exports in the current season have risen so far by 53% YoY to 7.5mt as of 6 September. The increase was largely driven by wheat exports of 4mt, which almost doubled from last year. Similarly, corn exports stood at 2.4mt (+9% YoY).

US weekly net export sales for the week ending 29 August show strong demand for US corn, while soybean and wheat shipments fell over the week. Weekly export sales of wheat were down to 329.5kt for the week, lower than the 497.6kt a week ago and 381.5kt the same time last year. Similarly, soybean exports fell to 1,430.7kt, lower than 2,472.2kt in the previous week and 1,783.1kt a year ago. In contrast, US corn shipments stood at 1,649.4kt, above the 1,509.4kt reported a week ago and 949.7kt for the same period last year.

Lastly, CFTC data shows that money managers decreased their net bearish bets in CBOT corn by 65,697 lots to 176,211 lots as of 3 September. The move was predominantly driven by falling short positions with gross shorts decreasing by 47,211 lots to 376,217 lots. Similarly, the speculative net short position in CBOT soybeans decreased by 22,455 lots to 154,096 lots over the last reporting week. Meanwhile, the net speculative short position in CBOT wheat fell by 13,578 lots to 42,624 lots over the last reporting week.

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Owen Li

Forex

The last month hasn’t been much fun for investors. The concentration has been based upon the elections, the wars in Ukraine and Israel, and also what the Fed may or may not do. All of these things have pushed the bulls into the pasture, trying to avoid the electric fences. At the same time, the bears have emerged from their caves and are roaming widely across all of our markets.

The numbers speak for themselves. In the last month, according to Bloomberg data, the Dow Jones is down -1.01%, while the S&P 500 is down -1.73% and the NASDAQ is off -2.55%. What is interesting here is the comparison of the sectors. The NASDAQ is full of high-tech stocks which are tumbling more than the rest of the equity markets. There is a clue here which we should all pay attention to as we make our investments.

“There is only one side of the market, and it is not the bull side or the bear side, but the right side.”- Jesse Livermore

In my view, the biggest driver of the equity markets is going to be who is favored to win the election and what their economic policies will be. There have been all kinds of policies tossed out recently, and I look at some of them and just shake my head. Inflation has not been only the purview of the Fed but both of our Presidential candidates. There is also the issue of the number of immigrants that have crossed into the country and what they will do to both the economy and the markets. The country is at a crossroads, and so are both the bond and stock markets. We are in the whirlpool of our elections, and there is no doubt in my mind that whoever is elected President will have a significant impact on our investments.

Please “bear” this in mind as we head towards November! We may be in a time of “barely” scraping by.

“The last leg of a bull market always ends in hysteria; the last leg of a bear market always ends in panic.”- Jim Rogers