November saw a net 94.1k more Canadians at work. Even with 77.2k more Canadians in the labour force, the unemployment rate fell to 5.6% – the lowest rate since data collection began in 1976.
Even better, the see-saw pattern of the summer was not seen, with 89.9k net full time jobs added, while part-time work was effectively unchanged (+4.1k). The gains were also by and large in the private sector (+78.6k), and in employment (+89.6k) as the number of self-employed Canadians ticked up just 7.2k in November.
Job gains were mainly seen among older Canadians. Core aged (25 to 54) workers led the way, adding 48.8k net jobs, while the net gain in employment among those aged 55+ was 38.8k. Employment rose 6.4k for those aged 15-24.
Looking at the industry breakdown, it was a pretty decent mix: goods-producing industries added 26.9k on gains in construction, while the services side of the economy added 67.2k on net, helped by professional services and healthcare. Across the provinces, it was generally a positive story. Alberta stands out in today’s report, as its unemployment rate fell a full percentage point to 6.3% – the largest single-month decline on record.
Despite strong employment gains, wage growth nevertheless slowed for a sixth straight month. Hourly wages for permanent employees were up just 1.5% year-on-year. Conversely, the aggregate hours worked was up a strong 2.1% year-on-year, reflecting a robust 0.9% monthly gain.
This is a volatile series, and so dialing back the lens a bit helps. The picture is still encouraging: employment growth now stands at 1.2% year-on-year, driven by full time work (up 1.5%) and private sector gains (+1.2%). The six month trend in employment growth now stands at 34k per month – well above the 15k or so that we would expect in an economy at full employment.
Key Implications
The Canadian economy needed a bit of good news, and today’s job report qualifies. As always, a grain of salt is needed when interpreting this volatile series, but there really is little to complain about in today’s data. Not only did we hit a record-low unemployment rate, we did it on the back of full-time employment and rising labour force participation. Unlike most months, the headlines of today’s report were also well above the standard error, meaning we can have some confidence in the monthly moves. The economy may be walking into some near-term headwinds, but at least from a labour market perspective, there seems to be a strong footing.
We may have escaped some of the volatility that characterized the summer months, but we have not yet broken the downtrend in wages. The pace of wage gains has been halved in just four months, and now sit firmly below core inflation. This is certainly not the type of wage growth one would typically associate with unemployment at all-time lows, and this aspect of the report will be certain to generate further debate among economists and policymakers.
As Governor Poloz’s speech yesterday made clear, energy sector developments and softer momentum are weighing on the Bank of Canada’s minds, and will likely delay the next policy interest rate hike into Spring 2019. Today’s labour market report is definitely an encouraging one, but the wage signal reinforces that there is little risk from an inflation control perspective in waiting a bit for their next move.
