CAD's Participation Rate Follows The U.S.

Includes: EWC
by: Dean Popplewell

Canada can be proud - it's broken the +7% barrier! In fact the new unemployment rate dipped to +6.9%, the strongest headline print in five-years after the Canadian economy added another +11.9k new jobs in September. Digging deeper, the revelation would suggest that the country in love with the 'maple leaf', has caught the participation rate flu it southern neighbor below the 49th parallel has been suffering from of late.

The bulk of the decline can be attributed to an exodus from the labor force by the 15 to 24 year old age group. In the grand scheme of things, and because of the particular age group profile, it's reasonable to assume that the 'young' generation over time will renter the workforce thereby upping the "new lower" participant rate. Governor Poloz at the Bank of Canada will want to see if the lower participation is in fact only a temporary shift "allowing it to remain on the sidelines without worrying too much about inflation."

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