The Conference Board of Canada’s Senior Economist Doris Chu offers the following insights on the merchandise trade data for October:
In an unfortunate turn of events leading into the holiday season, Canadian employment fell by 71 200, the largest decline since 2009. Simultaneously, the unemployment rate increased by a substantial 0.4 percentage points. While this is one of the worst LFS reports for jobs in a decade, it needs to be understood in its broader context. So far, job growth has been good this year, although that strength is mostly from the earlier part of the year. Wage growth also strengthened in November, which is a silver lining to this report. With that said, if Canada’s labour market continues to cool, Canada’s indebted household will feel the pinch.
- Employment declined 71,200 in November. Full-time employment declined by 38,400 while part-time employment declined by 32,800.
- Employment fell in all provinces except Ontario and Prince Edward Island. Quebec (–45,100), Alberta (–18,200) and British Columbia (–18,200) saw the largest declines.
- By industry the largest declines were in in manufacturing (–27,500) and public administration (–24,900).
- With the labour force staying largely unchanged, the unemployment rate surged 0.4 percentage points to 5.9 per cent in November. This is the highest level since August 2018.
- The unemployment rate rose significantly in Ontario (from 5.3 per cent in October to 5.6 per cent in November) and Quebec (from 5.0 per cent in October to 5.6 per cent in November). The unemployment rate in Alberta also rose significantly (from 6.7 per cent in October to 7.2 per cent in November).
- One piece of good news was that growth in average hourly wages continued to strengthen. Wages increased 4.5 per cent in November compared to the same month last year. This is up from a 4.3 per cent increase in October.
- Wage growth was widespread across industries with substantial increases in both goods industries (+5.1 per cent year-over-over) and services industries (+4.4 per cent year-over-year).
- This report could signal a change in the dynamic of Canada’s labour market. So far this year, we’ve seen low unemployment rates driving strong wage gains. However, job growth has been slow over the past six months, which has begun to show up in a higher unemployment rate. If the recent slow down in employment continues, it will be unlikely that the current pace of wage growth will be sustained.