Highlights:
- Employment fell 88k in January marking the first drop in 18 months.
- Part-time employment plunged 137k and full time jobs rose 49k.
- The unemployment rate ticked up to 5.9% but was still down 0.8% from a year ago.
- Wage growth strengthened to 3.3% on a year-over-year basis – in part because of a large minimum wage hike in Ontario.
Our Take:
Employment plunged 88k in January, bringing an end to an impressive 17-month long streak of gains – the longest such stretch in 17 years – in what is normally a very volatile measure. The monthly drop in headline employment is eye-catching but still only retraced about 60% of the 146 increase over just the last two months. Other details also weren’t as bad as the headline employment drop might suggest. Part-time employment dropped a whopping 137k – the largest one-month decline on record – but full-time jobs rose 49k. The unemployment rate ticked up to 5.9% but that was still just slightly above the 5.8% in December that matched the lowest reading on record since 1976. The rate is still down almost a percent from a year ago and more than that if sources of ‘hidden’ unemployment like discouraged workers are included. Indeed, by our calculations, the Bank of Canada’s closely-watched ‘LMI’ composite labour market indicator appears to have ticked modestly lower in January – consistent with further underlying labour market improvement. Permanent employee wage growth accelerated to 3.3% year-over-year in January. That was probably in part related to a big hike in the minimum wage in Ontario although wages also appeared to accelerate somewhat on balance in other provinces.
Broadly speaking, we don’t expect the 36k average monthly employment gain last year to be repeated, and today’s report does not change our view that labour markets will nonetheless continue to tighten.
