Saturday, June 10, 2023

Is Canada Heading For A Jobs Recession?

The country’s employers added 41,000 jobs in April, according to Statistics Canada, while the unemployment rate remained at 5% for the fifth month in a row, just above a record low.

An increase of more than 48,000 part-time jobs offset a decline of nearly 6,000 full-time jobs last month. StatCan said this was the first significant increase in part-time employment since October 2022.

Last month, mostly men aged 25 and older found jobs (more than 34,000), with the largest hiring taking place in Ontario (more than 33,000), according to StatCan. The warehousing and transportation industry (17,000 more) experienced the largest increases in employment, along with wholesale and retail trade (24,000 more).

Average hourly wages rose 5.2% in April, outperforming the most recent inflation data, which showed a 4.3% annual increase in March.

The latest jobs data once again surprised the consensus of economists, who had expected an increase of about 20,000 jobs in April.

But behind the headline numbers hide signs of weakness, such as a decline in full-time employment.

Much of the job growth is due to strong immigration, which has helped reduce job openings for businesses and kept the unemployment rate stable.

Aggressive rate hikes by the Bank of Canada in the coming months are expected to drag down the labor market, which could lead to a rise in unemployment.

On the other hand, the growth of part-time work can keep the overall employment level stable even when the economy slows.

The result could be something like a jobs slump, with Canadians holding on to low-wage jobs even as the economy contracted for a few quarters.

It’s almost a situation where the statistics will look like a recession, if any, but it won’t necessarily feel like one.

The Bank of Canada has warned that a tight labor market with wages above 5% per annum is not compatible with a return to the 2% inflation target unless inflation is associated with increased productivity.

The central bank is currently pausing on its aggressive interest rate hikes, but warned it would be open to raising them again if economic data showed inflation is not coming down as expected. Annual inflation was 4.3% in March and the Bank of Canada expects it to reach 3% this summer.

World Nation News Desk
World Nation News Desk
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