June 2023 LFS: Canada’s labour market momentum is fading
We shouldn’t over-react to one month of data, but it’s now clear that momentum in Canada’s labour market has faded since January’s blockbuster hiring binge.
Rewa
We shouldn’t over-react to one month of data, but it’s now clear that momentum in Canada’s labour market has faded since January’s blockbuster hiring binge. Will today’s release mark a turning point, when the strong-and-long run for Canada’s labour market finally came to an end? Last month, there were cracks in the foundation when employment growth shifted from full-time to part-time jobs. This month, employment fell for the first time in eight months — albeit modestly, by only 17,000 jobs, and concentrated entirely in the youth segment. We’ll need a few more months of data to definitively call any turning point, but this release will have recession watchers on heightened alert over the summer months.
Stephen Tapp, Chief Economist, Canadian Chamber of Commerce
KEY TAKEAWAYS
Canadian employment fell by 17,000 jobs in May, representing the first time in several months that employment was well below market expectations (+21,000.)
Hours worked fell by 0.4%, which isn’t an encouraging signal for Canada’s GDP growth in the second quarter.
The unemployment rate rose slightly to 5.2% — the first increase in nine months, although it remains near all-time lows.
There was evidence of a slow start to the summer job season with weakness concentrated in younger workers (jobs for those aged 15-24 fell by 77k), while jobs for core-age workers continued to climb (+63k). Employment was little changed for older workers.
By sector, job losses occurred in services (-40k, with business -31k and professional -13k). Employment rose in goods sectors, led by manufacturing (+13k).
In what remains a tight labour market, average hourly wages grew by 5.1% year-over-year. Despite weak labour productivity, wages continue to outpace inflation (4.4% in April), as workers’ pay is now catching up for the big inflation spike.
By province, employment in May fell in Ontario, Nova Scotia, and Newfoundland and Labrador, but increased in Manitoba. There was little change in other provinces.
Hybrid and remote work patterns are settling into a new post-pandemic equilibrium. In May, almost one quarter of employees either worked exclusively at home (14.4%) or in a hybrid arrangement (10%).
