Commentaries Topics: Labour

Amid high interest rates and slowing economic growth, February’s Labour Force Survey results shows there’s still plenty of steam left in the engine for Canada’s labour market. Following on last month’s blockbuster showing, this is another strong report – once again exceeding market expectations. We added another 22,000 jobs, and the unemployment rate held steady at 5.0%, close to its all-time low.

As we continue to monitor the economy for signs of cooling, hours worked keep rising, which suggests Canadian real GDP will get back into positive territory in 2023 Q1. Perhaps the biggest surprise is that average hourly wages rose 5.4% on year over year in February, up noticeably from 4.5% the month earlier. This number may cause the BoC to re-think its strategy of hold off on further rate hikes.

One thing is clear, the labour market remains exceptionally tight, keeping the keys firmly in the hands of job-seekers. It may be a while longer before the acute labour pressures that have plagued businesses begin to lift.

– Marwa Abdou, Senior Research Director, Canadian Chamber of Commerce

KEY TAKEAWAYS

• At 5.0%, Canada’s unemployment rate remains stubbornly tight and refuses to budge from near-record lows of 4.9% posted last summer. Though it was anticipated to edge up slightly (+10k), February’s figures posted an additional gain of +22K jobs.
• Continuing to be a strong driver of job growth were the employment numbers of workers aged 55 to 64 — +25K jobs (+0.7%) in February. This is the seventh month continuing a strong upward trend for this age group. Employment among youth and core-aged adults saw little change.
• Most of February’s job gains came from upticks in the fields of health care and social assistance (+15K; +0.6%), public administration (+10K; +0.9%), and utilities (+7.5K; +5.0%). The private sector also saw an impressive boost of 39K jobs (+0.3%), while public sector employment and self-employment saw little change. Conversely, jobs were lost in business services (-11K; -1.5%).
• Total hours also edged up an impressive 0.6% in February and are up 1.4% on a year-over-year basis.
• Average hourly wages rose 5.4% year-over-year — an uptick from January’s 4.5% after two months of deceleration. While this suggests households will have some spending power to navigate the rising living costs, the real risk is how this rebound will weigh on inflation—especially when labour productivity has been weak.
• Provincial employment increased in four provinces. After three consecutive months of lackluster growth, Manitoba posted a solid gain (+4.3K; 0.7%). Three of four Atlantic provinces saw modest rebounds after higher-than-average unemployment rates – New Brunswick (+5.1K; 1.3%), Newfoundland and Labrador (3.6K; 1.6%), Prince Edward Island (+1.7K; 2%). While there was little change in remaining provinces, Nova Scotia saw a decline (-4.7K; -0.9%).
• With its modest growth, February’s jobs report certainly brought more welcome news for job seekers. For the remainder of the economy, it leaves more room for doubt as to how much longer the market will continue to weigh on businesses as they continue to grapple with sustained recruitment and retention challenges amidst an extraordinarily difficult economic climate.
• As the gap between wage growth and inflation narrowed more this month, it remains to be seen whether this will be tip the Bank of Canada to lift its current hold on additional hikes as announced earlier this week.

SUMMARY TABLES

In stark contrast to recent high-tech layoffs, January’s blockbuster jobs report is proof that there’s still plenty of wind in the sails for Canada’s labour market. This was one of the strongest labour reports in a while, with 150K net new jobs added in January – double December’s figure and blowing past the market consensus of modest gains of 15k.

We also can’t ignore the broad-based gains for the fifth month – in both private as well as public sector – were accompanied by an impressive uptick in total hours (+0.8%). The big takeaway from this morning’s data is that calls for a recession in the Q1 2023 will have to wait.

KEY TAKEAWAYS

• January’s release reported job gains ten times bigger than market expectations (+15k) with 150K jobs (+0.8%) added to the economy. Broad-based gains were seen in full time (+121K) as well as private sector work (+115K).
• At 5.0%, Canada’s unemployment rate continues to hover near-record lows of 4.9%. Today’s epic report signals we’re not coming off the boil as quickly as expected, raising more questions about what comes next.
• Employment for the core working ages (25-54) was a key driver of this growth with an impressive uptick in gains of 0.8% (+100K). Employment rate among women was evenly split and is welcomed momentum for this subsector after December’s almost three-decade record high.
• Provincial employment increased in five provinces including Ontario (+63K), Quebec (+47K) and Alberta (+21K). Growth was also witnessed in several key industries including wholesale and retail trade (+59K), health care and social assistance (+40K); as well as educational services (+18K).
• Hours worked were especially notable after December’s lull as they edged up 0.8%. With a 5.6% year-over-year growth, this figure is an impressive rebound from a year prior when Canada was still in lockdowns with very high absenteeism.
• After months of persistent growth, the increase of 4.5% in average hourly wages slowed down from December’s figure (4.8%), although this partly reflects compositional changes based on comparing with January 2022, when there were fewer low-income jobs due to COVID restrictions. It’s clear that the full effect of BoC’s recent rate hikes hasn’t taken hold yet for the labour market. While trailing behind the latest inflation figures, it’s still well above the BoC’s target of 2%.
• All in all, January’s epic headline data comes after an equally impressive (and surprising!) labour numbers we saw south of the border last week. With January’s BoC’s rate pause, it leaves the door open to what lies ahead in a market that’s expected to be tough on businesses and consumers.

SUMMARY TABLES

Today’s year-end data shows the strength of Canada’s labour market. At 5%, the December unemployment rate is back down near the record lows that we saw six months ago. We also had another impressive and unexpected gain of 104,000 jobs, following subdued November figures. This gain was broad-based across industries and provinces. It was also mostly led by full-time, private-sector positions for youth workers. Wage growth remained above 5% for a seventh consecutive month.

A single blemish on an otherwise stellar report is that hours worked were little changed from November. All in all, it leaves us anticipating another hike by the Bank of Canada (BoC) later this month as they continue to try and slow down this piping hot job market.

Marwa Abdou, Senior Research Director, Canadian Chamber of Commerce

Key Takeaways

• At 5.0%, the unemployment rate is only slightly above near 40-year record low of 4.9% seen in June and July.
• December experienced an increase of nearly 104K jobs (+0.5%) as employment continues an upward trend. This gain, which defied market expectations (of +5 to 10K jobs), was driven by an increase for full time (+85K) and private sector work (+112K).
• Fully recouping cumulative losses from July to September, employment among youth (age 15-24) had an impressive gain of 69K jobs.
• Although employment among people in the core working ages (25-54) was little changed, employment rate among women in this group showed an almost three-decade record high. Looking at year-over-year (y-o-y) figures – 81.0% of core-aged women were employed in 2022. Also, immigrant women workers saw a rate boost from 2019 (+9.7%).
• Hours worked saw little changefrom November – only up 1.4% y-o-y despite December’s massive job gain.
• December data highlighted an increase in staff absenteeism (8.1% compared to pre-pandemic average of 6.9%) due to illness as elevated cases of influenza and other respiratory viruses continue in many parts of the country.
• Average hourly wages remain strong at 5.1% though growth has decelerated. This is the seventh consecutive month that hourly wages have remained above the 5% mark. This is still well behind the country’s inflation rate (6.8% in November).
• Provincial employment increased across six provinces (Ontario, Alberta, British Columbia, Manitoba, Newfoundland and Labrador, and Saskatchewan). Ontario (+42K), Alberta (+25K) and British Columbia (+17K) clocked in the job growth figures from November.
• Job gains were widespread across multiple service sector industries, including construction (+35k), transportation (+29k), culture and recreation (+25k), as well as professional and other services (+23K). Still, there were industries that slightly contracted including manufacturing (-8K), retail and wholesale trade (-9K), education (-10k) and health (-17K).
• All in all, December’s strong headline data increases the likelihood that the BoC will announce an additional interest rate hike by the end of this month. With working hours not budging, it also remains to be seen how this will translate in GDP figures.

Summary Tables

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A steady hold for Canada’s unemployment as wage growth persists

Today’s labour force data demonstrated little change in Canada’s unemployment rate, which was 5.1% in November, down by only 0.1% from October. After a very impressive headline gain in October, we had a very little increase of 10,000 net-new jobs in November.

This gain was broad-based across sectors — by way of full-time core-aged female workers, in both private and public sectors. Hours worked settled and wage growth picked up to 5.6% y-o-y. It will mean keeping an eye out for further rate hikes ahead as the Bank of Canada continues to steadily slow inflation.

Mahmoud Khairy, Economist, Canadian Chamber of Commerce

Key Takeaways

• November’s monthly unemployment rate showed minimal change at 5.1%, which was a 0.1% decline from October’s figure.
• Canadian employment increased by only 10,000 jobs in November. This figure was in line with market expectations following a larger than expected gain in October of 108,000 jobs (+0.6%).
• Total hours worked were up by only 0.1%, after a 0.7% gain in October. Compared to the year prior, this is an increase of 1.8% year-over-year (y-o-y).
• Employment growth in the private and public sectors also stabilized, while having grown around 2% over the past 12 months.
• Full-time jobs rose (+51k) in November — up over 2.9% y-o-y, while part-time employment continues with its sixth consecutive month flat streak.
• Job gains occurred across most sectors including finance, insurance, real estate, rental and leasing (21k), manufacturing (19k), information, culture and recreation (16k). Jobs contracted in construction (-25k), wholesale and trade (-23k) and professional, scientific and technical services (-15K) sectors.
• As employers look to fill record-high job vacancies, wage growth is now showing signs of slowing down.This month marks the sixth straight month since June that y-o-y growth has exceeded 5%. This will surely raise flags for the Bank of Canada as it looks to reel inflation in with aggressive hikes.
• The biggest provincial employment increase was in Quebec (+28K), while conversely, the largest contractions were in Alberta (-15K) and British Columbia (-14K).

Summary Tables

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Canadian manufacturers facing challenging operating conditions

The Purchasing Managers’ Index (PMI) offers an accurate leading indicator for business conditions that helps to anticipate changing economic trends. In today’s data, it shows challenging operating conditions for Canada’s manufacturing sector as higher input costs and slowing sales are taking a toll.

Mahmoud Khairy, Economist, Canadian Chamber of Commerce

Key Takeaways

• In November, Canada’s Manufacturing Purchasing Managers’ Index (PMI) reading of 49.6 was a slight improvement compared with the reading of 48.8 in October. Nonetheless, Canada’s PMI remains below the 50 “no-growth” threshold for the fourth consecutive month, which is clearly not good news, and signals weaking conditions and negative growth for the sector to close out 2022.
• Production contracted for the fifth month in a row due to lower new orders in addition to contraction of foreign sales as global uncertainties continue.
• Canada is not alone; these PMI surveys suggest that globally the manufacturing sector has been contracting modestly over the last three months. Advanced economies are faring a bit worse than emerging markets, but the slowdown is broad-based across many countries.

Summary Table

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Today’s data demonstrated significant resilience in Canada’s labour market. After four months of poor labour market performance, we had a very impressive headline gain of 108,000 net new jobs. This gain was broad-based across sectors and regions, and importantly, was led by full-time, private-sector positions for core-aged workers. Hours worked rebounded. Wage growth picked up to 5.6% year-over-year and will have the Bank of Canada watching closely to see if there will be further increases ahead.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce

KEY TAKEAWAYS

• Canadian employment rose by a surprising 108,000 jobs in October (+0.6%, blowing away market expectation of only +5k jobs). This month’s gains recouped previous job losses from May to September.
  
• Total hours worked rebounded, increasing by 0.7% to offset the 0.6% drop in September, and is now up 2.2% year-over-year.
  
• Despite the large job gains on the month, the unemployment rate held steady at 5.2%, as the labour force rose by a similar amount (+110k) with more people looking for work.
  
• Private-sector employment (+74k) finally picked up, for the first time since March 2022, which is welcome news. Full-time jobs rose (+119k), they are now up over 3% year-over-year, while part-time employment is roughly flat.
  
• Job gains occurred across most sectors, including construction (25k), manufacturing (24k), accommodation and food services (18k), as well as professional and other services. The only areas of weakness on the month were retail and wholesale trade (-20k) and natural resources (-7k).
  
• With employers looking to fill almost one million job vacancies, and inflation still near generational highs, wage growth was 5.6% year-over-year, which remains above 5% for the fifth straight month.
  
• Newcomers to Canada are succeeding in finding jobs in a hot labour market. Of those admitted to this country within the last five years, the employment rate is 70.7%, up 5.6 percentage points from October 2019.
  
• Provincial employment increased broadly across all provinces (exceeding the margin of error for a majority, six of 10). Central Canada drove the gains, with Ontario (+43k) and Quebec (+28k) leading the way.
  
• In October, more than 1.7 million Canadians had hybrid work arrangements.

SUMMARY TABLES

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At first glance, it looked like we finally received good news from Canada’s Labour Force Survey for September: after three months of declines, employment was up by 21,000 jobs, while the unemployment rate dropped back to 5.2% after unexpectedly spiking to 5.4% last month. Digging beneath the headlines, however, shows emerging signs of an underlying “cooling-off” period. First, hours worked are down over 1% since June. Second, labour force participation has sagged over the course of this year, and third, it’s the public-sector, not the private sector, that continues to push up employment. That said, Canada’s labour market remains historically tight. It’s remains difficult for businesses to fill the nearly one million vacant positions they’re seeking. And, though, wage growth exceeded 5% for the fourth month in a row, this still isn’t enough to boost workers’ purchasing power, as it’s below the highest rates of inflation seen in a generation.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce

KEY TAKEAWAYS

• Canadian employment was up slightly, with 21K net new jobs added in September. This reverses a three-month consecutive trend of falling employment.
• Still, total hours worked fell 0.6% and are off by an aggregate of 1.1% since June, although they remain up 2.4% year-over-year.
• The unemployment rate fell to 5.2% (from 5.4%), however, this is mostly because fewer people are looking for work.
• Public-sector employment (+35k) continues to lead the recovery, while private-sector jobs were only up by 9k; self-employment continued its weak performance throughout the pandemic (-22k).
• Job gains in education (46k) and health care (24k) were offset by losses in manufacturing (-28k); information, culture, and recreation (-22k); transportation and warehousing (-18k) and public administration (-12k).
• Even acknowledging the recent cooling off, Canada’s labour market remains tight. With employers looking to fill nearly a million job vacancies, and inflation near generational highs, wage growth was above 5% year-over-year for the fourth straight month. Wage growth is strongest in professional services (+9.1% yr/yr) and accommodation and food services (+8.7%), industries where labour demand is currently very high.
• Canada’s aging population is proving to be a major challenge for labour supply. Retirements show no signs of slowing. Of the 5.2 million Canadians aged 55-64, almost 1 million are retired.
• Provincial employment increased in British Columbia, Manitoba, Nova Scotia and New Brunswick, but was down in Ontario and PEI. Moves in other provinces didn’t exceed the survey margin of error.
• In September, more than one quarter of workers were either fully remote (16%) or hybrid (9%).

SUMMARY TABLES

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After three straight months of falling employment, Canada’s red hot labour market has started to cool off.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce

KEY TAKEAWAYS

• Canadian employment fell by 40,000 jobs (-0.2%) in August — worse than the modest gain the market expected (+5k to +15k). This is the third consecutive monthly drop, which brings the cumulative decline to 114k net jobs (-0.6%) since May, which have been primarily full-time jobs.
• Total hours worked were unchanged (after falling 0.5% in July), though they remain up a healthy 3.7% year-over-year.
• The unemployment rate, which had been on a steady downward track to new record lows, increased significantly (to 5.4%, up 0.5 percentage points).
• Employment losses in August were concentrated in full-time jobs (-77k, as part-time employment rose 38k), and in education (-50k, -3.3%, although perhaps we should view this result with caution until we get September data, given that the timing of school contracts changes from year-to-year) and construction (-28k, -1.8%). “Other” and professional services continued to make gains. By gender, employment was down for both women (-23k) and men (-17k).
• Despite the recent slowdown in employment, labour markets remain tight. With employers looking to fill over one million job vacancies, and inflation near generational highs, wage growth accelerated to 5.4% year-over-year (up from 5.2%). Wages for non-unionized workers are up more (6.3%) than for the unionized (3.6%), where gains for the latter may be delayed until collective agreements expire and are renegotiated.
• Retirements are creeping up among baby boomers (307k annualized in August 2022, compared with 273k in August 2019). StatCan estimates that population aging reduced Canada’s labour force by 374k over this three-year period!
• Provincial employment fell in BC, Manitoba, Nova Scotia, but was up in Quebec. Moves in other provinces didn’t exceed the survey margin of error.
• In August, more than 1-in-4 workers were either fully remote (17%) or hybrid (9%).

SUMMARY TABLES

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July’s Labour Force data is both unexpected and unprecedented, with Canada’s unemployment rate remaining at a multi-decade low of 4.9% for a second consecutive month. Wage growth also continued at June’s torrid pace, with average hourly wages up 5.2% year-over-year.

While good news for employees and job seekers, for businesses that are already navigating the pressures of inflation and increasing demand, rising compensation and competition for labour in a heated job market will continue to be a challenge.

Marwa Abdou, Senior Research Director, Business Data Lab

Key Takeaways

• The unemployment rate remains at 4.9% for the second consecutive month. This is a record low since the monthly data began in 1976.
  
• After returning to its pre-pandemic level for the first time in June, July marked the third consecutive decline in long-term unemployment which dropped 23K (-12.2%) to162,000.
  
• July experienced a decline of nearly 31K jobs, bringing the total loss of jobs since May to 74K.
  
• The decline in jobs appears to be slowing down, but some sectors continue to feel it more acutely than others. Employment among public sector employees fell by 51K (-1.2%) in July, the first decline in the sector in 12 months.
  
• In the services sector, employment fell by 53K, specifically wholesale and retail trade, health care and social assistance, and educational services. Conversely, there was a gain of net new positions of about 23K in the goods sector.
  
• Hours worked (on a monthly basis) declined by 0.5%. This is the third decline to hit 1.5% below the Q1 2022 peak in March. Persistent shortage of workers and lags in productivity will demand businesses rethink and retool existing jobs to maintain their bottom line and meet consumer demand.
  
• Average hourly wages of employees increased by 5.2%, matching the pace of previous months’ wage growth. While this is still below inflation, it increases the chance of a wage-price spiral that would further lift inflation above the Bank of Canada’s target.
  
• Labour force participation decreased 0.2 percentage points to 64.7% following a 0.4 percentage point drop in June. The core-age labour force participation rate was 87.9% in July, well below the record high of 88.6% in March 2022.
  
• The labour market remains exceptionally tight with low unemployment-to-job-vacancy ratio – building up steadily prior to the pandemic. The not-so-great news is we are seeing it affect health care more severely despite increased labour demand in the industry. The good news is, on the whole, there is little warning that there is an increase in the rate at which people are changing jobs or changing employment status.
  
• All in all, July’s data were well below the consensus projections and will likely have an impact on GDP figures for Q3 2022.

Summary Tables

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