Scotiabank Previews Canada's August Jobs Data Ahead of BoC Decision

10:31 AM EDT, 09/03/2025 (MT Newswires) -- Canada will release the Labour Force Survey (LFS) for August on Friday at 8:30 a.m. ET, Scotiabank said.

The report could influence market pricing as the last jobs data before the Bank of Canada's Sept. 17 policy decision, the bank said.

Scotiabank estimates a gain of 35,000 jobs and a stable unemployment rate of 6.9%.

June's large 83,000 gain gave way to a 41,000 loss in July, with 83% of that in the 15-24 age group, heavily dominated by students. Their prospects have likely been reduced in recent years by a flood of temporary residents under relaxed immigration policy, the bank said.

Excluding this group shows a net gain of 67,000 jobs for those aged 25 and older in June and July. The underlying trend is not as weak as more dovish voices suggest, and this volatility could shake out in the coming report.

Seasonal adjustment (SA) factors are also likely to overstate employment growth this August. Recent SA factors have been among the highest on record when comparing like months of August over time. Pair that with even a modest unadjusted drop in jobs and a robust SA factor could generate a solid employment gain, Scotiabank said.

Aside from statistical quirks, job postings remain above pre-pandemic levels, and small businesses have recently signaled stronger hiring appetite in CFIB (Canadian Federation of Independent Business) measures. Most firms report no plans to downsize.

The Air Canada strike fell in the LFS reference week. Striking workers mainly affect hours worked rather than employment, if respondents expect to return to work. While indirect effects may have been disruptive in travel-related sectors, Scotiabank doubts this will be a meaningful influence.

Overall, Canada's job market is holding up, the bank said. The unemployment rate of 6.9% is slightly above the OECD's estimated equilibrium rate for Canada.

Canada has added 103,000 jobs year-to-date through July. Statistics Canada drew attention in its last LFS release by saying there was no job growth this year, then defining that as since January. The agency may be overlooking changing hiring patterns, with 115,000 jobs created in January 2023, 44,000 in January 2024, and 76,000 in January 2025.

What continues to matter for the BoC is the signal from strong wage growth in recent months. One-third of Canadian workers are subject to collective bargaining, compared with about 10% in the US, making wage settlements more important in Canada.

Wage settlements remain strong as they reset agreements signed three to four years ago. Adjusted for inflation, wage pressures continue to outpace weak productivity. The combination of real wage gains, a direct cost to employers, and limited growth in output per hour worked is a "one-two punch" adding to inflation risks, Scotiabank said.

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