In January, employment in Canada increased by 37,000 jobs, marking a 0.2 per cent rise from the previous month. While this might seem significant, it only accounts for half of the population growth rate of 0.4 per cent. The unemployment rate saw a decline to 5.7 per cent, the first since December 2022, mainly due to a dip in participation rates. Notably, the net private sector did not contribute to January’s job growth.
Within goods-producing sectors, we observed a universal decline in employment. In contrast, the service sector saw gains, particularly in wholesale and retail trade, as well as finance, insurance, real estate, rental, and leasing. These gains compensated for losses in the accommodation, food services, and transportation and warehousing sectors.
Provincially, only Saskatchewan and Quebec experienced employment decreases. However, these were more than offset by significant gains in Ontario and Alberta, while British Columbia remained relatively stable.
On a yearly scale, the average hourly wage growth decelerated to 5.3 per cent.
The Canadian job market is witnessing a mix of subdued hiring activity, influenced by weaker demand, and a robust increase in labour supply, driven by high levels of international migration. This dynamic has led to a more balanced job market. However, the past year has been particularly challenging for young workers, with a marked decrease in participation rates and a significant increase in unemployment among those aged 15 to 24. This trend is more pronounced in certain racialized groups, such as Black Canadian youth, who have seen a 4.4 percentage point rise in unemployment in 2023.
Despite a slight slowdown, wage growth remains hot. Looking ahead to 2024, a sluggish labour market is expected to temper wage growth. The current trend of strong wage increases combined with low productivity growth poses a risk of inflating labor costs and potentially fueling inflation.