• The Canadian economy added a net 34.5k jobs in January. The unemployment rate fell again, to 5.5%, helped by a second monthly decline in labour force participation.
  • The gains were entirely in full-time work (+35.7k) as part-time employment was little changed (-1.2k). The net new jobs were largely for employees (+26.3k), and of those, largely in the public sector (+21.3k).
  • The industry mix is challenging to align with the public/private split. All of the January increase came on the goods-producing side (+49.1k), including notable increases in manufacturing (+20.5k), construction (+15.8k) and agriculture (+11.5k). Conversely, the service producing industries were generally weak (-14.5k in aggregate), with a notable decline in health care employment (-16.0k).
  • Net job gains were once again a Quebec (+19.1k) and Ontario (+15.9k) story. The Quebec unemployment rate fell again, to 5.1%, still a bit shy of the all time low reached last summer.
  • Hourly wages for permanent employees were up a healthy 4.4% year-on-year, although this figure is still flattered by softness this time last year. Aggregate hours worked fell a touch month-on-month in the third such decline, leaving year/year growth in this measure a paltry 0.5%.
  • Getting away from the monthly noise, the six month hiring trend stood at a solid 20k, roughly in line with the economy’s trend job-creation potential. On a year-ago basis, 268k net positions have been created (+1.4%), with about 40% of gain coming from the public sector – about twice the contribution that would be implied by its share of the stock of jobs.

Key Implications

  • Ok! Another decent month of job gains, coming from full-time creation and with solid wage gains. The Canadian economy has had no shortage of headwinds and shocks of late, but monthly noise aside, the labour market continues to shrug them off, suggesting the economy remains resilient.
  • Of course, the standard quibbles of late apply: aggregate hours worked may be a noisy measure, but the trend is clearly weak. And while we’ve now had a few encouraging months, much of the growth in jobs over the last 12 months has been from the public sector – not a bad thing per se, but not a ringing endorsement of economic health.
  • Looking ahead, we expect some near-term challenges – the novel Coronavirus is likely to continue to hit activity in the travel/accommodation sectors for instance. But, absent a deeper or more lasting shock, we see few catalysts to break the recent trend-like performance of labour markets. The bigger question from a GDP perspective is whether/when all these new workers will start pushing hours worked higher.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.