Quick take

Unemployment rate reaches record low in March

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  • In March the labour market added 73,000 jobs, a sign that job growth is stabilizing following large swings in the previous two months. The labour force participation rate held steady, and the unemployment rate ticked down to 5.3 per cent, setting a new all-time low.
  • As restrictions continued to ease, more jobs returned. Employment gains were widely distributed across the economy. Notable gains were recorded in accommodation and food services (+15,000) and other services (+14,000). These were partially offset by declines in transportation and warehousing and professional, scientific and technical services. Among goods-producing industries, employment rose in all sectors except utilities.
  • Employment rose in four of the 10 provinces, spearheaded by gains in Ontario (+35,000) and Quebec (+27,000). Declines were recorded in Saskatchewan (-4,500), Manitoba (-4,200) and Newfoundland and Labrador (-2,900). Employment was little changed in Alberta, British Columbia and Nova Scotia.
  • On a year-over-year basis average hourly wages grew by 3.4 per cent in March. Total hours worked grew by 1.3 per cent, exceeding the record level reached in February.

Key Insights:

  • With the prospect of future lockdowns much diminished, a partial return of workers to offices is underway. However, the pandemic has showcased the feasibility of remote working and many employers are opting for fully or partially remote working arrangements going forward. Amid recruitment challenges and labour scarcity, employers are facing pressure to be flexible and accommodate staff preferences wherever possible. The distribution of workers across offices and homes will have important implications for the economies of downtown cores, housing markets and public transport networks.
  • High job vacancy rates and a record low unemployment rate are indicative of a labour market with little spare capacity. Combined with rampant inflation, pressure on wages is building. However, so far, inflation has outpaced wage growth. For households, higher wages can help to offset the rising costs of living. Yet there is concern that higher wage growth may create additional inflationary pressure in the economy.
  • After plummeting by over 25 per cent during the early months of the pandemic, total hours worked have since recovered. Alongside employment, hours worked provide a valuable measure of labour input into the economy. Despite an overall recovery, there is significant variation across industries. Among high-contact services, total hours worked are still well below pre-pandemic levels. This deficit is more than offset by increases in the number of hours worked in public administration as well as professional and financial services. The reallocation of hours between industries speaks to a changing composition of employment and shifting trends in the labour market.

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Liam Daly

Liam Daly

Economist

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