Modest Job Growth in March Caps Off Blockbuster Start to 2023

Canadian Economics

By: Liam Daly

  • The Canadian labour market added 35,000 jobs in March. The results of March’s Labour Force Survey bring the net employment gain in the first quarter of 2023 to over 200,000. Meanwhile, the unemployment rate held steady at 5.0 per cent.
  • Among goods-producing industries, the results were muted. The largest decline was recorded in construction (–18,800). Across the service economy, the picture was mixed. Employment in transportation and warehousing posted the largest gain, rising by 41,000. On the other hand, employment was little changed in the professional, scientific and technical services industry and the healthcare and social services industry.
  • Across Canada, employment rose in 4 of 10 provinces. Gains were recorded in Ontario (+21,000), Alberta (+14,000), Manitoba (+3,300) and Prince Edward Island (+1,700). Meanwhile, employment fell in Saskatchewan (–4,300). Employment remained largely unchanged in the remaining provinces.
  • The pace of wage growth in March remained elevated. However, year-over-year growth in average hourly wages inched down from 5.4 per cent in the previous month to 5.3 per cent in March.

Key Insights

With inflation cooling, the differential between wage and price growth has closed. This is good news for workers for whom this differential represents falling real wages and an erosion of purchasing power. In February, year-over-year growth in the consumer price index fell to 5.2 per cent and is expected to decelerate further as monetary policy continues to weigh on demand for goods and services. For inflation to continue falling and eventually return to the target rate of 2 per cent, the Bank of Canada acknowledges that wage growth will also need to fall, given the weak productivity growth of recent quarters. Today’s marginal deceleration will provide little comfort in this respect.

Retirement is a significant milestone in a person’s life, and the decision to do so is influenced by several factors, not least the prevailing economic conditions. Given the rising share of older workers in the Canadian labour force, the number of retirements has trended upward over the past two decades. The lifting of pandemic restrictions drove a surge in retirements in 2022 as many who had delayed their exit from the workforce during the first two years of the pandemic seized the moment. Today, rates of retirement appear to be returning to pre-pandemic levels. Greater financial pressure due to high inflation, stock market volatility and the rising cost of debt act as incentives to remain in work. In fact, employment rates among 55- to 64-year-olds of both sexes have risen sharply in recent months.

The number of job vacancies rose in January for the first time in 8 months. While a slowing economic outlook is weighing on labour demand, job vacancies are still well above their pre-pandemic level. The unemployment rate remains close to 5 per cent, and employers have increasingly turned to migrant labour to fill vacancies. In 2022, the number of temporary foreign worker (TFW) approved positions rose by 68 per cent. While a large share of the positions held by TFWs have historically been concentrated in the agriculture sector, the distribution of TFWs across the economy is widening. The number of approvals for TFW-approved positions in sales and service occupations tripled in 2022. Meanwhile, there was also a significant increase in approvals among occupations in manufacturing and utilities as well as trades, transport and equipment operators and related occupations.