The Canadian labour market posted a blowout 150,000 gain in January. This is the largest gain on record (excluding the restart from the COVID shutdown). This gain boosted the labour force participation rate to 65.7% (+.03). Unemployment remained unchanged at 5.0%.
The largest employment increases were in Ontario (+63,000; +0.8%), Quebec (+47,000; +1.1%) and Alberta (+21,000; +0.9%). The unemployment rate in Quebec fell to 3.9% whereas the jobless rate in Alberta rose slightly to 6.0%.
Most of the gains were in full-time positions (+121,000). With the strong gain in employment, total hours worked rose 0.8% in January and was up 5.6% on a year-over-year basis.
The positive news for the Bank of Canada was the decline in average hourly wages. It rose 4.5% on an annualized basis and was down from 4.8% in December. This may be due to the job gains being in lower wage sectors (retail and hospitality).
In January, actual employment (not seasonally adjusted) declined by 125,000. This is far lower than the typical decline of 250,000 – 300,000 we see in January. What then is the underlying story? Employers are adjusting to rising rates by not filling vacancies rather than making layoffs.
Key Takeaway
January was a strong month, but labour market data can show month-to-month volatility. For example, the strong December employment gains were revised downwards by more than 30,000 jobs. While the jobs news generated chatter about the potential for further rate hikes, the Bank of Canada is not going to react to one report. Their decision in March will largely be determined by inflation. If inflation continues to decelerate, then this number will be background noise and rate hikes will remain on pause.
Employment
(change in thousands)
1 (3 mo. ago); 2 (12 mo. ago)
Source: Statistics Canada
Independent Opinion
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