Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment dropped 33k in March, much weaker than expected. The unemployment rate edged higher to 6.7%, but would have increased more if it were not for the decline in the participation rate. The weakness in March, comes after some underperformance in February and suggests that the labour market is deteriorating.
Wage growth for permanent workers decelerated to 3.5%, below expectations. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 1.3%, suggesting very weak wage gains in recent months.
Overall, the deterioration of the labour market may be signalling the start of a possible recession in Canada due to the US tariffs. As seen in recent weeks, the extreme uncertainty has had a significant negative impact on business sentiment, lowering hiring intentions.
Today’s report complicates the BoC’s job going into the April meeting. On one hand, the economy is slowing rapidly, while on the other hand, inflationary pressures have been more elevated than expected in recent months. With this in mind, the next CPI release, on the eve of the BoC’s April meeting, could be the deciding factor as to whether the Bank cuts rates or stays on hold. If inflationary pressures remain elevated, it is very likely the Bank will hold. After all, they have been reminding that “monetary policy cannot offset a trade war”.
Alberta saw a 15.4k decline in employment, a third consecutive month of decline. As a result, the unemployment rate increased to 7.1%, back above the national measure. We also note that the employment rate eased further in March to its lowest level if the pandemic period is excluded.
Wage growth in Alberta remained strong in March to 3.7% and outperformed relative to the rest of the country for a third consecutive month and the 3-month annualized change of the seasonally-adjusted series was 5.8%, suggesting a robust rise in wages in recent months. Wages in Alberta have generally underperformed relative to the rest of the country in recent years, so some positive outperformance is encouraging for Albertans’ purchasing power (see Where’s the boom? And the rise and fall of the Alberta Advantage for some explanations).
Employment decreased by 32.6k in March, lower than expected and following robust increases since November last year. As a result of the decline in employment, the unemployment rate rose to 6.7%. The increase in the unemployment rate was somewhat reduced by a decline in the participation rate to 65.2% from 65.3%. The employment rate, the share of the population holding a job, eased to 60.9%. Both the participation rate and the employment rate remain close to their lowest levels since the late 1990s.
Wage growth for permanent workers decelerated to 3.5% from 4.0% y-o-y. The 3-month annualized change in seasonally-adjusted wages slowed significantly to 1.3% from 4.2%, suggesting weaker wage pressures in recent months.
The details show that the job gains were in part-time jobs (+29.5k) while there was a loss in full-time (-62.0k). The lower employment in March was mostly in the private sector (-47.8k), and the public sector (-2.8k), while self-employed (+18.0k) employment increased. Over the past year, about 25% of job creation was in the public sector. Hours worked increased in March (+0.4% m-o-m), suggesting that economic activity was likely stronger on the month.
On an industrial level, there were job losses in both the service sector (-20.9k) and the goods-producing sector (-11.7k).
The details in the goods-producing sector show that the job losses were mainly in agriculture (-9.3k), manufacturing (-7.1k), and construction (-3.8k). They were partly offset by increases in natural resources (4.4k) and utilities (4.2k).
The decrease in the service industries (-20.9k) was led by trade (-28.5k), information, culture and recreation (-20.3k), business, building and other support services (-10.3k), and educational services (-3.5k). These decreases were partly offset by increases in other services (+11.6k), transport and warehousing (+10.1k), and professional, scientific and technical services (+9.6k).
At a provincial level, the increase in employment was concentrated in Saskatchewan (+6.6k, +1.1% m-o-m), BC (+5.7k, +0.2% m-o-m), and Nova Scotia (+2.0k, +0.4% m-o-m). There were some job losses in four provinces, led by Ontario (-27.5k, -0.3% m-o-m), Alberta (-15.4k, -0.6% m-o-m), Quebec (-4.9k, -0.1% m-o-m) and Manitoba (-1.1k, -0.2% m-o-m).
The unemployment rate grew slightly at the national level but saw some slight increases in four provinces, led by Quebec (+0.4pp), Alberta (+0.4pp), Ontario (+0.2pp), and BC (+0.1pp). Newfoundland (-0.5pp), Nova Scotia (-0.5pp), New Brunswick (-0.5pp), and Saskatchewan (-0.5pp) saw a decline in the unemployment rate.
The unemployment rate is the highest in Newfoundland (+10.0%), PEI (+7.5%), Ontario (+7.5%), Alberta (+7.1%), BC (+6.1%) and Nova Scotia (+6.1%). It is the lowest in Saskatchewan (+4.9%), and QC (+5.7%).
Wages for permanent workers decreased slightly nationwide. It increased most in Nova Scotia (+7.9% y-o-y), Newfoundland (+7.8% y-o-y), Manitoba (+4.6% y-o-y). It rose at the slowest pace in Ontario (+3.9% y-o-y), and Alberta (+3.7% y-o-y), New Brunswick (+3.0% y-o-y), and Quebec (+2.6% y-o-y).
Looking at CMAs, Employment grew the most over the past year in Kamloops (+27.4% y-o-y), Kingston (+8.2% y-o-y), St. Catherines-Niagara(+7.3% y-o-y). However, the lowest-performing cities were Belleville (-24.9% y-o-y, Nanaimo (-11.4% y-o-y), and Saint John (-8.1% y-o-y).
The unemployment rate was the highest in Windsor (+9.3%), Peterborough (+9.1%), Toronto (+8.7%). While the lowest rates are in Saguenay (+3.4%), Victoria (+3.6%), Thunder Bay (+4.1%) and Sherbrooke (+4.3%)
In Alberta, employment decreased by 15.4k, a second consecutive decline. With the job losses, the unemployment rate rose to 7.1% from 6.7% while the participation rate decreased to 68.3% from 68.5%. Similarly, the employment rate, the share of the population holding a job, eased to 63.4% from 64.0%. Wage growth for permanent workers slowed slightly to 3.7% y-o-y. The 3m/3m annualized wage growth surged to 5.8%, suggesting a strong increase in average wages for permanent workers in recent months.
The job losses in Alberta were mainly full-time (-30.3k), while there were part-time (+14.9k) gains. Employment was lower in the private sector (-28.2k), while there were some gains in and self-employed (+10.1k), the public sector (+2.6k).
The employment losses were in both the service sector (-11.8k) and goods-producing sector (-3.5k).
The decline in the goods-producing industry was mainly in manufacturing (-11.3k, while natural resources (+5.6k) saw some gains.
The service sector decline was led by trade (-9.2k), accommodation and food services (-6.6k), healthcare (-5.6k). These decreases were partly offset by transport and warehousing (+4.7k), educational services (+2.8k), and public administration (+2.3k).
On a regional basis[1], the data is published on a three-month average basis (see table below). Over the past three months, the province lost 5.5k jobs each month on average. The decreases were mainly in Calgary (-10.6k), Western Alberta (-1.4k) and Lethbridge (-1.4k), and Edmonton (-0.1k).
The unemployment rate for the province remained at 6.7% on average over the past three months. The unemployment rate edged lower in most regions, except in Lethbridge-Medicine Hat where it increased to (+1.0pp). The biggest easings were in Red Deer (-0.6pp), Camrose-Drumheller (-0.3pp), and Edmonton (-0.1pp).
The unemployment rate is the highest in Edmonton (7.0%), Calgary (+7.0%). It is the lowest in Western Alberta (5.4%), Camrose-Drumheller (5.5%), and Wood Buffalo-Cold Lake (5.6%).
The employment rate for Alberta meagered to 63.9% over the past three months. The employment rate improved the most in Red Deer (+1.4pp), and Camrose-Drumheller (+0.7pp). It decreased the most in Calgary (-0.9pp), Western Alberta (-0.5pp), and Edmonton (-0.2pp).
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Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.