June 2023 LFS: Canada’s job market is turning a corner for the first time in a year
Canada’s labour market is turning a corner with June’s data. Coming in at the highest level in over a year, Canada’s unemployment rate edged up to 5.4%.
Rewa
Canada’s labour market is turning a corner with June’s data. Coming in at the highest level in over a year, Canada’s unemployment rate edged up to 5.4%. We’re also seeing average hourly wages coming off the boil, with their slowest growth in over a year.
However, the headline jobs number was strong, exceeding market expectations with a gain of 60K jobs (vs. 20K consensus), driven by full-time employment.
Overall, the market is showing signs of strength and resilience, although wage growth is moderating while still remaining high. While a softening labour market was the kind of good news that the Bank was likely hoping for, it remains to be seen if it will be enough to dissuade another hike.
Marwa Abdou, Senior Research Director, Canadian Chamber of Commerce.
KEY TAKEAWAYS
Canada’s unemployment rate stands at 5.4%, a 0.2% increase from May, and the highest level in over a year. This represents a shift from the near-record lows of 4.9% recorded last summer.
Market analysts anticipated a slight increase in job numbers (+20,000) and a marginal recovery in workforce participation. However, June’s data surpassed expectations, reporting a gain of 60,000 jobs (0.3% increase) compared to the lackluster report in May. Considering the unemployment rate, these indicators suggest a weakening labor market.
June’s job gains came by way of upticks in the full-time employment (+110K; +0.7%) from May. The gains were concentrated in men; employment among women of all age groups remained relatively stable throughout June.
Job gains were seen in wholesale and retail trade (+33K), manufacturing (+27K), health care and social assistance (+21K) and transportation and warehousing (+10K). However, it wasn’t all positive news for Canadian businesses as declines were seen in construction (-14K), education (-14K) and agriculture (-6K).
Total hours worked remained virtually unchanged in June and were up 2.0% on a year-over-year basis. Conversely, average hourly wages slowed to 4.2% on a year-over-year basis in June, following an increase in May (5.1%). While it was the slowest wage growth since May 2022, this is still higher than inflation (3.4% in May). As the Bank of Canada enters a critical period in managing inflation, and ahead of next week’s policy rate announcement, this continues to be a critical indicator.
Provincial employment increased in three provinces – Ontario (+56K), Nova Scotia (+3.6K), and Newfoundland and Labrador (+2.3K). Employment declined in Prince Edward Island (-2.4K). There was little variation in the other provinces.
Overall, as the last major economic data release before next Wednesday’s interest rate decision by the Bank, this report provided some positive news as the market is slowly coming back into balance. While it won’t be the only factor weighing on the decision, it certainly won’t hurt in alleviating some of the Bank’s concerns in bringing down inflation to its target.
