Quick take

Healthy job growth in November but the spectre of Omicron looms

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  • The Canadian economy added 154,000 jobs in November, a marked improvement on October’s flat performance. The labour force participation rate remained unchanged at 65.3 per cent, while the unemployment rate fell for the sixth consecutive month reaching 6.0 per cent.
  • Across the services sector, employment grew in all but two industries, namely educational services and other services (except public administration). In addition, notable growth was recorded in the health care and social assistance industry and the professional, scientific and technical services industry. After falling in the previous two months, employment in the accommodation and food services industry increased by 0.5 per cent in November. In the goods economy, employment rose by 0.7 per cent, powered by gains in the manufacturing sector where employment reached the highest level since January 2018.
  • Employment increased in six of the ten provinces. Employment growth in Ontario and Quebec accounted for 74 per cent of the job growth and was driven by big gains in the Toronto and Montreal census metropolitan areas. Employment was virtually unchanged In British Columbia, Manitoba, Saskatchewan and New Brunswick.
  • Total hours worked grew by 0.7 per cent eclipsing the pre-pandemic level of February 2020 for the first time. Self-employment in Canada held steady in November but remains 250,000 below the level recorded before the pandemic. Employment for this worker class is at its lowest level since 2012.

Key insights:

  1. The Canadian Recovery Benefit came to an end in October and was replaced with more targeted measures. The removal of this financial support comes after employment recovered to above the pre-pandemic level in September. Over recent months concerns were raised that measures such as the CRB were disincentivizing the return of workers to employment. Yet the distinct lack of wage growth is, in our view, a greater disincentive, particularly in low-wage service industries. November’s job growth suggests the withdrawal of the CRB may have pushed some workers back into employment though alone this will not be sufficient to address the significant labour shortages affecting several industries.
  2. The share of Canadians working from home was little changed in November. Despite the lifting of public health measures, roughly 4.2 million Canadians are still working remotely, down just 400,000 since November 2020. Continuing elevated levels of remote work indicates that, at least for high-skilled service-sector workers, the pandemic has fundamentally and permanently reshaped work practices in Canada. The permanence of remote working will impact demand for low-wage workers in sectors such as building support, hospitality and retail located in the downtown areas of urban centres.
  3. The emergence of a new COVID-19 variant might spoil the party. Omicron has created concern across the globe. The epidemiological data that emerges in the weeks ahead will have important implications for the Canadian labour market. Thankfully vaccination rates across Canada are high, although booster programs are in a nascent stage in most provinces. Border restrictions have already tightened. Though we don’t expect widespread lockdowns this time round, the emergence of the Omicron variant would dampen consumer and business confidence which could hurt near-term economic growth.
Liam Daly

Liam Daly

Economist

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