08:01 AM EDT, 09/06/2024 (MT Newswires) -- Canada updates job market readings at the same time as the US this morning (8:30amET).

The bank expects 30,000 job gains while the consensus is for 25,000. It sees the unemployment rate rising one tick to 6.5%, in line with consensus.

According to Scotiabank, the drivers are:

-- there is less evidence that Canadian jobs face the same issues with seasonally adjusted (SA) factors as the US. In fact, SA factors for this June and this July (months when jobs were weak) were the highest on record, implying that June and July would have been weaker in SA terms if not for this point.

-- However, the recent weakness with two roughly flat jobs prints has been due to youths and part-time jobs. This effect may be maturing as the summer job market winds down.

-- Youths 15-24 years old lost 42,500 jobs over the past two months. Men 25+ gained 13,000, women 25+ gained 25,000.

-- Scotiabank maintains that youths are paying the price for the excessive numbers of non-permanent residents (NPR) that have arrived in Canada over the past couple of years through international students and temporary foreign workers. As the school year begins, as Canada reduces work eligibility rules for international students and as absolute numbers of international students and temp foreign workers are reduced, the youth job market may stabilize and pick up.

-- There are very few useful advance indicators for job growth in Canada

-- Wages have climbed at the sharpest three consecutive m/m SAAR pace since last summer. Real wage growth by LFS and payroll SEPH measures has been on an upswing.

-- the reason the bank thinks the unemployment could tick higher is because the labor force is likely to surge. July was anomalous to the prior trend as the labor force fell by 11,000 despite rapid population growth that was driving much faster gains in the labor force over prior months. Unless jobs rip, the resumption of population-fed gains in labor supply should push the unemployment rate higher. This could swing in the other direction with cooling labor force expansion and potentially downward pressure on the unemployment rate when the movement toward changing immigration policy translates into data.

-- The further reason for a potential tick higher in the unemployment rate is that its rise has been mostly fed by temps, also know as NPRs including international students, temporary foreign workers and asylum seekers that have been allowed to arrive in Canada in vastly excessive numbers. This effect is likely to persist in the short term before waning as soon as next year.

In summation, the job market in Canada has been stronger under the hood than the headline job reading over the past couple of months, but Scotiabank wants to see what Friday's numbers reveal. This position is informed by the fact that the softness has been skewed toward the youth market and has been "messed up" by the government's "mismanagement" of temps.

Take that out, and the rest of the job market is performing better alongside persistent wage pressures marked by accelerating real wage gains, added the bank. Be careful toward dismissing that latter observation as a lagging indicator because, unlike the US, collective bargaining is a much more important factor in Canada as many more contracts face wage resets and they filter into hard wage data with a lag.