November 03, 2023 | 09:03
Canadian Jobs: We Just Can't Get Enough
Canadian employment rose by 17,500 in October, just a tad below the consensus guess of about 25,000. The details were generally on the soft side, and our overall score for this report is a soft 44.8 (from 0 to 100). Notably, full-time jobs fell, wage gains eased, hours worked were flat, and—perhaps most importantly—the unemployment rate took a two-tick step higher to 5.7%. That brings the jobless rate a full 0.8 ppts above the five-decade lows hit last summer, and a bit above pre-pandemic trends. In days of yore (i.e., maybe five years ago), a monthly rise of 17,500 would be about normal, and would certainly have been enough to keep the unemployment rate steady. But with Canada's population growing at breakneck speed—the labour force is now growing at well over 50,000 people per month—such a job gain is simply not enough. The broader softening in the job market is only slowly chipping away at wage pressures, a key focus for the Bank of Canada. Average hourly wages eased to a 4.8% y/y pace from 5.0% in the prior month, but is only slightly below the average gain in the prior year (also 5.0%).
By industry: Unlike earlier months, this looks to be a reasonably clean read as there were no obvious special factors. Construction was the biggest driver at +23k, a turnabout for what had been a sluggish sector. The only other notable rise was in info, culture & recreation (+20.9k). The standouts on the downside each raise some concerns, as some of the most economically-sensitive sectors were the clunkers; manufacturing (-18.8k), retail & wholesale trade (-21.7k), finance & real estate (-8.1k), and hotels & restaurants (-5.5k) were the weak spots.
By region: The province that really stood out last month was Alberta with a whopping 37,700 advance. However, in a theme across much of the country, that province still saw its jobless rate rise a tick to 5.8% amid torrid population growth. On the flip side, five provinces reported job losses, with the two big central provinces especially soft—Ontario fell 14.300, while Quebec dropped 22,100. The latter saw its unemployment rate pop 5 ticks to 4.9%, and thus reversed roles with Saskatchewan, which now boasts the lowest rate in the country (at 4.4%).
Bottom Line: While the headline job gain was uneventful, make no mistake that the underlying picture for Canada's labour market is softening. Exhibit A on that front is the grinding rise in the unemployment rate, from a steady 5% level early this year to 5.7% now. While wages are responding only slowly to the cooldown, it is likely only a matter of time before they slow more meaningfully with headline inflation ebbing and job vacancies disappearing. This will keep the Bank of Canada pinned more fully to the sidelines, although we still believe that rate relief remains a distant prospect.