Economic insight provided by Alberta Central Chief Economist Charles St-Arnaud. This report includes regional details for Alberta.
Today’s Labour Force Survey data suggest the labour market in Canada remains strong, despite the weakness observed over the summer months. The low unemployment rate continues to signal that the labour market remains very tight, which the Bank of Canada is closely monitoring. Moreover, the report also shows that wage growth continues to remain robust, with average wages increasing by 5.6% y-o-y.
The resilience in the labour market supports the Bank of Canada’s view that further rate increases will be needed to control inflation. As we have explained on numerous occasions, the Bank of Canada needs to slow growth and create some excess capacity in the economy to fight inflation. This will likely lead to a rise in the unemployment rate and to job losses. With this in mind, a weakening of the labour market would be a welcomed outcome for the BoC.
The continued resilience of the labour market is likely to tilt the BoC in favour of bringing forward some of the expected tightening. As a result, we believe that the BoC will increase its policy rate by 50bp at next week’s meeting. At the moment, we believe this could mark the last rate increase of the current cycle. However, whether the BoC hikes further will depend on inflation and whether we see a confirmation that core measures are peaking.
Alberta saw a decline in employment in November and the unemployment rate rose to 5.8%, its highest since April. Over the past year, Alberta’s labour market had outperformed the rest of the country. However, the province’s labour market seems to be underperforming in recent months, with weaker job gains, a rising unemployment rate, and a decline in hours worked. This could point to some weakness in the economy.
Employment inched higher by 10.1k in November, in line with expectations. The unemployment rate remained eased to 5.1% from 5.2% as a result of an increase in employment and a decline in the participation rate to 64.8% from 64.9%. The participation is 0.8 percentage points (pp) lower than before the pandemic, as workers left the labour force. If the participation was the same as before the pandemic, the unemployment rate would be 6.2%. The employment rate, the share of the population holding a job, decreased to 61.5% from 61.6%, still slightly below its pre-COVID level.
The details show that the job gains in November were mostly full-time (+50.7k), while there was a loss in part-time jobs (-40.6k). In addition, the rise in employment was mainly in the private sector (+25k) and self-employed (+10k), while there was a loss in public sector jobs (-25k).
On an industrial level, the increase in employment was mainly in the service sector (+20k), while there was a decline in the goods-producing sector (-9k).
The details in the good-producing sector show that most of the job losses were in construction (-25k), utilities (-4k), and agriculture (-3k). On the other hand, there were gains in manufacturing (+18.5k) and natural resource (+4k).
The gain in the service industry was mainly in finance, insurance and real estate (+21k), information, culture and recreation (15.5k), education (12k), and accommodation and food services (+8k). These gains were partly offset by losses in trade (-23k), and professional, scientific and technical (-15k).
Despite the overall level of employment being above its pre-COVID level, only 10 out of 16 industries have a level of employment above its pre-pandemic level. The lagging sectors are: agriculture, trade, transport and warehousing, business, building and other support services, accommodation and food services, and other services. Employment in the accommodation and food services is still more than 10% below its pre-COVID-19 level.
In Alberta, employment decreased by 15.1k in November. As a result of the lower employment, the unemployment rate rose to 5.8% from 5.2%, its highest level since April 2022. The participation rate eased to 68.6% from 68.8%. The participation rate in the province is still 1.8 percentage points (pp) below its pre-pandemic level suggesting many workers are remaining on the sidelines. If the participation rate was at the same level as before the pandemic, the unemployment rate in the province would be 8.2%. The employment rate, the share of the population holding a job, decreased to 64.6%, its lowest since February 2002 and 0.5pp below its pre-pandemic level.
The job losses in Alberta were in both the goods-producing sector (-2.8k) and the service sector (-12.3k). The decline in the goods-producing industry was in construction (-13k) and utilities (-3kk). These losses were partly offset by gains in manufacturing (+6k), natural resources (+4k), and agriculture (+2k).
The lower employment in the service sector was mainly the result of declines in trade (-16k), accommodation and food services (-10k), and transport and warehousing (-3k). These decreases were partly offset by gains in other services (+8k), education (+3.5k) and health care (+2k).
Despite overall employment being above its pre-COVID level, only 9 out of 16 industries have a level of employment above its pre-pandemic level. The lagging industries are: agriculture, utilities, construction, manufacturing, business, building and other support services, information, culture and recreation, and accommodation and food services. Employment in the accommodation and food services sector, the worst-hit industry, remains almost 20% below its pre-COVID-19 level. Employment in the manufacturing sector is 5% below its pre-covid level, significantly 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 lost 12.0k jobs, with employment declining in Edmonton (-10.9k), and Calgary (-10.0k. There were gains in Red Deer (+3.8k), Camrose-Drumheller (+2.8k), and Wood Buffalo-Cold Lake (+2.8k).
Compared to the pre-pandemic levels, most regions have employment above the pre-covid levels, led by Calgary (+7.8%), Red Deer (+5.1%) Edmonton (+3.2%) and Camrose-Drumheller (+2.8%). In comparison, employment in Lethbridge-Medicine Hat (-4.8%) and Wood Buffalo-Cold Lake (-3.0%) are still well below their pre-covid level.
The unemployment rate for the province inched lower to 5.0%, but the regional performance was mixed. The unemployment rate declined in most regions, led by Camrose-Drumheller (-1.7pp), Wood Buffalo-Cold Lake (-1.2pp), and Lethbridge-Medicine Hat (-0.4pp). The unemployment rate rose in Red Deer (+0.7pp) as a result of an increase in the participation rate.
The unemployment rate is the highest in Red Deer (+6.2%), Western Alberta (+5.6%), and Calgary (+5.4%). It is the lowest in Lethbridge-Medicine Hat (2.9%), Camrose-Drumheller (3.9%), and Wood Buffalo-Cold Lake (4.5%).
The employment rate for Alberta declined to 64.2% from 64.7%. The employment rate decreased the most in Edmonton (-1.0pp), Calgary (-0.9pp), and Lethbridge-Medicine Hat (-0.3pp). It increased in Red Deer (+2.0pp), Camrose-Drumheller (+1.7pp), Red Deer (+2.0pp), and Wood Buffalo-Cold Lake (+1.2pp).
 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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