Economic insight provided by Alberta Central Chief Economist Charles St-Arnaud. This report includes regional details for Alberta.
Today’s Labour Force Survey data shows that job gains were modest and below expectations after a rebound in employment following the Omicron wave. Nevertheless, the unemployment rate reached a new record low of 5.2%. These are the signs of a mature labour market where most of the post-pandemic adjustment has already happened. It also provides signs of a continued tightening of the labour market with the employment rate back to its pre-pandemic level.
The situation in the labour market and continued high inflation support the need for aggressive rate hikes by the Bank of Canada. Accordingly, we expect the BoC to increase its policy rate by 50bp at the June and July meetings and end the year at 2.50%.
Alberta saw another gain in employment in April. The unemployment rate declined further and is at its lowest since 2015. However, this continues to be partly the result of workers having yet to return to the labour market, as shown by the participation rate remaining below its pre-pandemic level. However, we note that the employment rate has returned to its pre-COVID level. We expect the labour market in the province to continue to improve. The continued record value of oil production should broadly support the economy and the labour market.
Employment increased by 15.3k in April, weaker than expectations. As a result, the level of employment is further above its pre-pandemic level (+2.4%). As a result of the rise in employment and a small decline in the participation rate, the unemployment rate edged lower to 5.2% from 5.3%, the lowest level since records started in 1976. Nevertheless, the underutilization rate, which includes those working less than 50% of their usual hours and those not in the labour force but who wanted to work, rose slightly and remains above its pre-pandemic level at 12.9% (11.4% in February 2020). The participation rate declined slightly at 65.3% from 65.4%. The employment rate, the share of the population holding a job, was unchanged 61.9%, at its pre-COVID level.
The details show that the job gains in April were in part-time (+47k), while there was a decline in full-time jobs (-32k). In addition, almost all of the increase in employment was in the private sector (+22k), while there were some modest job losses in the public sector (-5k) and in self-employed (-1k).
On an industrial level, the increase in employment was in the service sector (+31k), while there was a loss in the goods-producing sector (+31k).
The details in the good-producing sector show that the losses were mostly in construction (-21k), after 4 months of gains. There were also small losses in natural resources (-2k) and agriculture (-1k). Those declines were partly offset by gains in manufacturing (+5k) and utilities (+2.5k).
The increase in the service industry was mixed, with gains in public administration (+16.5k), professional, scientific and technical (+15k), information, culture and recreation (+13k), and education (+12.5k). Those increases were partly offset by declines in trade (-18k) and health care (-11.5k).
Despite continued gains and the overall level of employment being above its pre-COVID level, only 11 out of 16 industries have a level of employment above their pre-pandemic level. The lagging sectors are: agriculture, transport and warehousing, business, building and other support services, accommodation and food services, and other services. Despite further gains in March, accommodation and food services remains one of the worst-performing industry since the pandemic (16% below its pre-pandemic level). Employment in the agriculture sector is currently almost 30% below its pre-COVID-19 level, the worst-performing industry.
In Alberta, employment increased by 15.9k in April. The level of employment is 2.8% (or 65k) above its pre-COVID level. The unemployment rate dropped to 5.9%, the lowest since April 2015. However, the decline in the unemployment rate can be partly attributed to a lower participation rate, which eased to 69.2% from 69.3%. Moreover, the participation rate in the province remains 1.2 percentage points (pp) below its pre-pandemic level suggesting many workers are remaining on the sidelines. The employment rate, the share of the population holding a job, rose to 65.1%, back to its pre-pandemic level.
The job gains in Alberta were entirely in the service sector (+17.5k), while there were some losses in the goods-producing sector (-1.4k). Every goods-producing industry saw a small decline in April, with the exception of agriculture (+1k).
The job performance in the service sector was mixed. Most of the job gains were in trade (+11k), health care (+4.5k), transport and warehousing (+3k) and education (+3k). These increases were partly offset by losses in business, building and other support (-4k), other services (-4k), information, culture and recreation (-2k).
Despite continued job gains and overall employment being above its pre-COVID level, only 10 out of 16 industries have a level of employment above their pre-pandemic level. Those industries are: natural resources, construction, trade, transport and warehousing, finance, insurance and real estate, professional, technical and scientific, business, building and support services, education, health care, and public administration. Employment in the accommodation and food services sector, the worst-hit industry, remains almost 20% below its pre-COVID-19 level, underperforming the rest of the country.
On a regional basis, the data is published on a three-month average basis (see table below). Over the past three months, the province gained 30.0k jobs, with most of the gains in Calgary (+16.8k). Employment also rose in Edmonton (+7.4k), Lethbridge-Medicine Hat (+6.9k), and Wood Buffalo-Cold Lake (+0.7k). It was unchanged in Western Alberta and declined in Camrose-Drumheller (-1.2k) and Red Deer (-0.9k).
Compared to the pre-pandemic levels, only Camrose-Drumheller (11.2%) has employment below its pre-pandemic level. Conversely, Calgary (+6.8%), Lethbridge-Medicine Hat (+4.0%), Edmonton (+3.0%), Wood Buffalo-Cold Lake (+1.5%), Western Alberta (+0.6%), and Red Deer (+0.5%) all have employment above their pre-pandemic level.
The unemployment rate for the province as a whole declined to 6.5% from 7.1%. The decrease in the unemployment rate was broad-based, with the biggest drops in Western Alberta (-1.2pp), Lethbridge-Medicine Hat (-0.8pp), Red Deer (-0.8pp), and Wood Buffalo-Cold Lake (-0.8pp). The unemployment rate is the highest in Calgary (7.0%), Edmonton (7.0%), and Red Deer (6.2%). It is the lowest in Western Alberta (4.3%), Lethbridge-Medicine Hat (4.8%), and Camrose-Drumheller (5.4%).
The employment rate for Alberta improved to 65.0% from 64.4%. It improved in Lethbridge-Medicine Hat (+2.9pp), Calgary (+1.1pp), and Wood Buffalo-Cold Lake (+0.6pp) but deteriorated in Camrose-Drumheller (-0.8pp), and Red Deer (-0.7pp).
 All the numbers are expressed as three-month average of the non-seasonally adjusted number.
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.
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