[ad_1]
A pedestrian walks past a hiring sign on display at shop in Toronto.Tijana Martin/The Globe and Mail
Canada’s labour market stalled at the end of 2023 with employers pulling back on hiring as part of a broader slowdown in the economy, while wages continued to grow quickly.
The number of people employed was effectively unchanged in December while the unemployment rate remained at 5.8 per cent, Statistics Canada reported on Friday. Economists were expecting employers to add around 13,500 jobs last month, according to a Reuters poll.
The job market softened notably through the back half of last year, as high interest rates weighed on consumer spending and business investment. Employment growth averaged 23,000 per month in the second half of the year compared to 48,000 per month in the first half, Statscan said.
A weakening labour market shores up the case for the Bank of Canada to start cutting interest rates in the coming quarters. However, the central bank remains wary of rapid wage growth, which can feed through into inflation.
Average hourly wage growth accelerated in December to 5.4 per cent from 4.8 per cent in November. The central bank has said that wage growth in excess of 4 per cent is not compatible with low and stable inflation unless there is a significant jump in labour productivity.
“December data provided a classic mixed bag of results, with some stronger than expected news in terms of wages and hours worked, alongside a weaker than anticipated headline change in employment,” Canadian Imperial Bank of Commerce senior economist Andrew Grantham said in a note to clients.
“Because of that, today’s data don’t change our expectation for the timing of a first Bank of Canada interest rate cut, which we still see occurring in June this year.”
Most private-sector economists expect the central bank to start cutting interest rates sometime in the first half of this year. Financial markets are leaning towards the first rate cut coming in April.
Canada’s working-age population continues to grow quickly amid record-high levels of immigration, rising by 74,000 in December. However, the economy is not creating enough jobs for all newcomers. The employment rate – the proportion of the population above the age of 15 with a job – fell to 61.6 per cent, the fifth decline in the past six months.
Meanwhile, the unemployment rate rose steadily through 2023, from 5 per cent in January to 5.8 per cent by year-end, as relatively robust job creation failed to keep pace with newcomers looking for work.
The employment picture varied across sectors and between full-time and part-time work in December. Part-time jobs increased by around 23,600 while full-time jobs declined by roughly the same amount.
There were big gains in professional, scientific and technical services jobs, which rose by 46,000. Healthcare and social assistance jobs also increased by 16,000. This was offset by a decline in retail, manufacturing and agriculture jobs.
Employment increased in British Columbia, Nova Scotia, Saskatchewan and Newfoundland and Labrador, but declined by 48,000 Ontario. Employment in other provinces was essentially flat.
“Today’s sluggish results suggest that the softening seen in the broader economy is finally catching up with the job market,” Bank of Montreal chief economist Douglas Porter wrote in a note to clients.
“Prior to December, employment gains had remained amazingly sturdy in the face of paltry GDP growth (at the expense of sickly productivity). That may now be shifting. If so, this would suggest that the jobless rate is almost certain to head higher, pushing above 6 per cent in coming months.”
Canada’s stagnant job market stands in contrast with the United States, which showed stronger-than-expected employment gains in December, according to data published on Friday by the U.S. Labor Department.
The U.S. economy added 216,000 non-farm jobs last month, up from 173,000 in November, while the unemployment rate remained steady at 3.7 per cent. The U.S. economy broadly outperformed the Canadian economy through the back half of 2023.
[ad_2]
Source link