Employment Rises, But Full-Time Work Gains Notably Absent

Canadian Economics

By: Liam Daly

Employment in Canada rose by 41,000 in April, driven by an increase in part-time work. The number of Canadians in full-time work was largely unchanged. Both the labour force participation rate and the unemployment rate held steady at 65.6 per cent and 5 per cent, respectively.

Among the goods-producing industries, employment rose in construction (+7,000) and manufacturing (+2,800). These gains were partially outweighed by declines in agriculture (-3,300) and utilities (-2,000). Across the service economy, employment in the transportation and warehousing industry rose by 16,500, the third consecutive monthly increase. There were also significant gains in wholesale trade (+24,000), educational services (+14,500), and information, culture and recreation (+16,100). However, besides these four industries, employment was either unchanged or declined in the remaining service industries. Some of the largest declines were recorded in the finance, insurance, real estate, rental and leasing sector (-8,800) and the professional, scientific and technical services industry (-6,100).

Across Canada, employment rose in just 2 of 10 provinces. Gains were recorded in Ontario (+33,000) and Prince Edward Island (+2,200). Meanwhile, employment fell in Manitoba (-4,000). Employment remained largely unchanged in the remaining provinces.

Year-over-year growth in average hourly wages remained elevated at 5.2 per cent, just 0.1 per cent off the pace of the previous month.

Key Insights

Labour supply in Canada has strengthened in recent months. Among working age Canadians (those between 15 and 64 years), the labour force participation rate has charted record levels in recent months, rising above 80 per cent. Besides immigration, several economic factors are pushing up labour force participation. Job vacancies rose to an all-time high last summer, and wage growth subsequently accelerated. For job seekers, excess demand in the labour market has improved the prospect of securing work and better pay. In addition, the Federal government’s Early learning and Child Care plan, which seeks to reduce the cost of childcare is likely starting to take effect, drawing more women into the workforce. Among older workers, the rise in the cost of living has eaten into retirement savings, creating an incentive to remain in work.

Labour demand in Canada has remained resilient despite rising headwinds in the economy, but for how long? Job vacancy data and the Conference Board of Canada’s newly released Canadian Hiring Index , which tracks changes in online job postings, both show that while hiring activity in Canada has cooled over the last 12 months, it remains elevated relative to pre-pandemic levels. In the United States, layoffs rose to a two-year high this week. In Canada, despite creeping upwards in recent months, a notable uptick in job cuts has yet to materialize. However, tighter credit conditions, slowing consumer spending and a deceleration in key export markets will increase financial pressure on Canadian firms in the months ahead, raising the risk of layoffs.

In April, the Public Service Alliance opted to strike following an impasse in contract negotiations with the government. The strike represents the largest industrial action in Canadian history involving over 150,000 public sector workers. The recent bout of inflation has created legitimate concerns among workers over the rising cost of living. The future of remote working, widely adopted during the pandemic, is also a source of disagreement. The outcome of this dispute will set a precedent for unions across the country as they look to secure improved pay and conditions for their members. The risk of further industrial action comes as the Bank of Canada is working to cool inflation. The effect of wages in the future path of inflation is contentious, with voices such as the governor of the Bank of Canada arguing that elevated wage growth risks slowing inflation reduction.