Quick take

Tepid September Job Numbers Cap Off a Sluggish Third Quarter

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  • Employment held steady in September, following three consecutive months of decline. The labour force participation rate continued to trend downwards, falling by 0.1 per cent on the previous month. Fewer people searching for work pulled the unemployment rate down to 5.2 per cent. Today’s Labour Force Survey release caps off a sluggish third quarter in which the labour market made scant progress in terms of employment growth. 
  • Among goods-producing industries, there were significant job losses in manufacturing. These losses were partially offset by gains in utilities and the forestry, fishing, mining, quarrying, oil and gas sectors. In the service economy, educational services posted solid employment growth, while the largest declines occurred in the information, culture and recreation and transportation and warehousing industries.
  • Across the country, employment fell in four of the ten provinces. Employment rose in British Columbia, Manitoba, Nova Scotia and New Brunswick. Meanwhile, employment fell in Ontario and Prince Edward Island. In the remaining provinces, employment remained effectively unchanged.
  • Average hourly wages grew by 5.2 per cent on a year-over-year basis. The rising cost of living and tight labour markets are the principal drivers of higher wage growth. With inflation appearing to have peaked and hiring among firms slowing, some of this pressure will subside in the months ahead.

Key Insights

Recent months have seen a growing number of Canadians leave the workforce due to retirement. In September, 294,500 Canadians left their job in the previous year due to retirement. Retirements fell during the pandemic amid concerns over the rising cost of living and as pandemic restrictions, such as the inability to travel, incentivized many to delay their exit from the workforce. The upward trend in retirements, which pre-dates the pandemic, has now returned. Given the uneven distribution of older workers across the economy, the phenomenon of rising retirements will impact certain sectors more than others. For example, industries such as manufacturing, forestry and transportation and warehousing are more exposed to the effects of rising retirements.

In the first half of 2022, Canada welcomed over 230,000 permanent residents and appears on track to exceed the admission target for this year. The federal government’s drive to boost immigration is a response to the economic pressures created by a low fertility rate and an ageing population. Increased immigration has a wide range of societal and economic implications. For the labour market, higher immigration trends to push up the unemployment rates in urban centres, where most recently landed immigrants settle. Given that widespread labour shortages extend far beyond urban centres, supporting the regionalization of new arrivals throughout Canada is vital to ensure smaller, rural communities also reap the benefits of immigration. One way of encouraging regionalization is by improving settlement services outside urban centres.

The composition of employment in the economy has changed significantly over the course of the pandemic. Notably, there has been growth in the number of occupations requiring university education and a reduction in the number requiring a high school diploma or no education. As demand for more educated workers continues to rise, fueled by technological change and automation, workers with lower levels of education face a rising opportunity cost as suitable employment opportunities diminish.

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Liam Daly

Liam Daly

Economist

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