• Coming in better than expected, 35,800 jobs were added to the Canadian economy in August.
• The headline number looked solid, but the gains were entirely driven by a huge rise of 75,700 in public sector employment.
• Private sector employment declined by 39,900.
• The unemployment rate inched 0.1 percentage points higher to 8.1%.
• A whopping 79,900 full-time jobs were added in the month, but this was offset by a 44,100 job decline in part-time workers.
• Self-employed workers and employed workers gained equally, but among the employed workers, the jobs were concentrated in the public sector.
• Among the job gains, payrolls increased substantially in education (up 68,400), which more than offset the 65,300 jobs lost in this sector in July.
• Average hourly wages increased 2.3% from a year ago, a slight pickup from the 2.2% increase in the previous month.
• The bulk of the employment advance was in Quebec, and half of the provinces saw their unemployment rates jump. Alberta and Nova Scotia were the only provinces to see payrolls decline.

Outlook

Rebounding from the previous month's job losses, 35,800 jobs were added to Canadian payrolls in August. The good news is that Canada's employment has hit a new pre-recession high, meaning we have recouped all of the jobs lost during the downturn. Employment is now 2.4% higher than a year ago, a 33-month high.

While the headline job gain looks positive on the surface, it was all driven by a huge 75,700 gain in public sector jobs. Public sector employment is up 4.7% year-over-year, which is double the 2.3% increase in the private sector.

Private sector employment declined by about 39,900, marking the second month in a row that private sector employment has declined.

Somewhat surprising was the 0.1-percentage-point increase in the unemployment rate to 8.1%. This was due to the outsized 0.3% gain in the labour force. This possibly signals a return of optimism in employment prospects as more people return to seek employment.

Among the job gains, payrolls increased substantially in education (up 68,400), which more than offset the 65,300 jobs lost in this sector in July. Healthy increases were also found in professional, scientific, and technical services (up 28,300) and construction (up 12,000). Both of these sectors lead in annual job growth, at 8.8% and 7.9%, respectively.

Job declines were focused mainly in manufacturing (down 25,600), business, building, and other support services (down 18,700) and information, culture, and recreation (down 18,100).

To make this a sustainable and solid job recovery, the private sector will have to rally and jump on the hiring bandwagon to decrease the unemployment rate.

However, with the rapid deceleration in growth in Canada, and the major headwinds in the United States—overall growth in North America is projected to move towards the 1% zone in the third quarter—private sector hiring is not expected to revive soon, and this will weigh negatively on consumer sentiment going forward.