- The Canadian economy added 64,000 jobs in September with most of the growth concentrated in part time work. Job gains were rooted in the public sector and self-employment with little change in private sector employment. For the third consecutive month, the unemployment rate held steady at 5.5 per cent.
- Among the goods-producing industries, there was little positive job growth, the largest contraction occurring in the construction sector (-17,500). Meanwhile, in the service economy, notable gains were posted in educational services (+65,800) and transportation and warehousing (+18,900). The largest declines were recorded in finance, insurance, real estate, rental and leasing (-19,800) followed by wholesale and retail trade (-10,700).
- Across Canada, employment rose in six of 10 provinces. Increases were recorded in Quebec (+39,000), British Columbia (+26,000), Manitoba (+8,800), Saskatchewan (+6,000), Nova Scotia (+3,200) and Prince Edward Island (+2,700). Employment declined in New Brunswick (-2,700). Employment remained essentially unchanged in the remaining provinces.
- Wages are refusing to play ball. The pace of average hourly wages growth inched up to 5.0 per cent year-over-year in September. The lack of wage growth deceleration over the summer months will be a concern for the Bank of Canada, increasing the chance of an additional rate increase at the end of the month. Meanwhile, south of the border, unexpected strength in U.S. job numbers this month point to residual economic strength and raise the spectre of a further rate rise by the Federal Reserve.
Insights
September marks the end of a third quarter in which the labour market added 100,000 jobs, roughly half the number added in the first quarter of the year. During this time, the latent effects of higher interest rates have grown, weighing on demand for goods and services in the economy. Firms are responding by reducing hiring activity. Our own Canadian Hiring Index reveals online job postings have fallen steadily over 2023 and, after spiking in 2022, are now at or below the level recorded in the run up to the pandemic across several provinces.
Although an increase in employment this month may appear to show labour market on a strong footing, the results should be interpreted with caution, given the wider context of strong population growth. The absence of private sector employment growth this month is a telling sign of underlying weakness. Other signs hint at a weakening job market including an increase in the involuntary part time employment rate and a rise in self-employment.
We forecast population growth of 3.0 per cent in 2023, making Canada’s population the fastest growing in the G7. After the fertility rate reached a record low in 2022, virtually all of Canada’s population growth is now reliant on international migration. The economic case for international migration is strong given the Canada’s aging population. Over the last decade, declining unemployment and labour force participation rates reflect rising pressure on labour supply as more Canadians exit the workforce through retirement. While international migration is critical, it is not a silver bullet. Inflows of young and core-aged migrants can help reduce the old age dependency for now, but the day will come when they too grow old and retire.
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