09:06 AM EDT, 06/04/2025 (MT Newswires) -- Several clients have been asking about Canada's Survey of Employment, Payrolls and Hours (SEPH) payrolls measure following last week's release, said Scotiabank.

Specifically, they point to how the Labour Force Survey (LFS) may have its issues such as the wild seasonally adjusted factors, but SEPH is also flagging job losses this year. The thesis goes that SEPH is hard payrolls data and so investors can't ignore the signals being sent by that measure and the Bank of Canada should be alarmed, noted Scotiabank.

Here are several points on why the bank's economist disagrees with that thesis, with much of the emphasis upon how SEPH's Achilles Heel is the massive revisions.

-- 1. SEPH lags by over two months to LFS. It's too stale, unlike the United States that releases both the household and payrolls surveys simultaneously.

-- 2. SEPH only captures nonfarm payrolls. It excludes not only agricukture, but also many small businesses including the self-employed, that are important in Canada and that are up about 40,000 jobs year-to-date.

--3. SEPH also excludes 'off the books' employment, which can be sizeable in Canada -- think taxes, benefits, rules, etc. LFS is self-disclosed and doesn't face the same issue.

-- 4. SEPH is revised monthly, LFS annually, and SEPH monthly revisions can be "huge."

-- 5. Why does SEPH have such large revisions to monthly jobs estimates? Partly because SEPH incorporates business openings with a lag as data becomes available. This drives the undercounting of jobs in the short term, as Statistics Canada acknowledges, and which may be why significant revisions are more likely to be up than down. SEPH is as such often falsely portrayed as hard data when it's not.

-- 6. StatsCan offers a series for LFS adjusted to SEPH measurement concepts. Adjusted LFS is persistently tracking higher than SEPH using the same concepts.

-- 7. Over time, however, LFS and SEPH generally follow each other after all the revisions are accounted for, but there can be "significant" differences.

-- 8. SEPH offers no picture of the labor force and unemployment, which is critically important and features only in LFS. The unemployment rate outlook won't be captured in SEPH figures but faces risks to job growth but also labor force growth, as immigration rules are tightened. To look at one without the other is like eating the cake and tossing the icing.

In summation, both LFS and SEPH have issues, which is why the BoC looks at all labor force readings from those and other sources. At present, Scotiabank wouldn't say there is a lot of slack in Canada's job market.

Regardless, the BoC's issue is with inflation risk and the job market offers a "tenuous" connection to inflation risk a) in the short-term, and b) even over time through a Phillips curve.