Quick take

Job growth slows and roadblocks lie ahead

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  • Canada added 55,000 jobs in December, a significant slowdown from the 154,000 posted in November. The unemployment rate kept its momentum, falling for the eighth month in a row to 5.9 per cent, just 0.2 per cent higher than the pre-pandemic (February 2020) rate. The labour force participation rate remained relatively constant at 65.3 per cent, about the same level it has hovered around the past few months.
  • Most of the employment increase came from the goods sector, which accounted for about 80 per cent of the total job growth. The construction industry was the main driver of growth and added jobs for the first time since August. Employment was barely changed in most services industries, with education services seeing the only significant increase.
  • Just two provinces, Ontario and Saskatchewan, saw employment grow in December, a far cry from the six in November. Almost all the growth came from Ontario, though Saskatchewan saw its first meaningful employment increase since September. All other provinces saw employment stay roughly the same as the previous month.
  • Self-employment increased by a slim margin in December but remains well below pre-pandemic levels. Long-term unemployment dropped by 8.0 per cent, declining for the second month in a row. Average hourly wages were up 2.7 per cent year-over-year.

Key Insights:

  • Long-term unemployment fell for the second straight month in December, before which the rate had been relatively constant since August. This at least partially reflects the withdrawal of the Canada Recovery Benefit (CRB) in favour of more targeted financial support. The Canada Worker Lockdown Benefit, which debuted in November, only applies to those affected by recent or ongoing lockdowns. This likely spurred some of the long-term unemployed to either find employment or drop out of the labour force.
  • Self-employment slightly ticked up in December but remains well below pre-pandemic levels. The withdrawal of the CRB, which was available to the self-employed if they were no longer working, may have incentivized some of the self-employed to get their operations up and running again. Still, we are far from a return to normalcy. In industries like scientific, professional, and technical services, gains in paid employment have surpassed losses in self-employment as tight labour markets have made paid employment a more attractive option for the formerly self-employed.
  • Notably, the December employment data was collected before additional public health restrictions were implemented. Though job growth was positive, the slowdown compared to November’s employment gains could represent uncertainty over the omicron variant affecting businesses’ hiring decisions. With the omicron variant now rampant and stringent measures being enacted in Quebec and Ontario, January could see the first dip in employment since last May. Services industries will be hardest hit, particularly accommodation and food services, as restrictions on indoor dining will depress demand.
Momanyi Mokaya

Sean Adams

Economist

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