Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Job gains remained for a third consecutive month with a 76k increase in January. Over the past 3 months, Canadian employment has increased by 70k on average each month, much stronger than during the previous months. Despite the rise in employment, the unemployment rate remained relatively high at 6.6%.
Wage growth for permanent workers decelerated to 3.7%, slightly below expectations and the slowest since April 2022. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 1.0% and has been below 1.5% for three consecutive months, suggesting most of the deceleration is due to weaker wages in recent months and that the easing in wage growth should continue in the coming months.
Overall, the report points to a strong labour market to start 2025. Nevertheless, it is important to note that the amount of slack remains important, with the unemployment rate close to 7% and the participation rate and employment rate close to their lowest level since the late 1990s. However, we note that the employment rate and participation rate seem to have bottomed out in recent months. This situation, coupled with a stabilization in the unemployment rate, suggests that the amount of slack in the labour market could be on the cusp of shrinking
The Bank of Canada will welcome today’s report as a sign that the Canadian economy is more robust than expected. Nevertheless, it remains to be seen whether it will be sustained. As such, the sharp increase in uncertainty due to the threat of US tariffs will negatively affect business investment and the rest of the economy.
We believe the strength of the labour market somewhat reduces the need for a cut at the March meeting. However, with the elevated uncertainty likely to be a drag on the economy, the BoC is unlikely to rely only on employment for its decision, and we continue to believe that a rate cut remains likely at the March meeting.
Alberta saw a decline in employment after two consecutive months of strong job gains. Despite the lower employment, the unemployment rate remained unchanged at 6.7%, its lowest since March 2024, but also note a decline in the participation rate and the employment rate.
Wage growth in Alberta jumped higher in January to 4.3%, its fastest since August 2024, and outperformed relative to the rest of the country. Moreover, the details show that average wage levels in the province have increased for the first time since the summer. Wages in Alberta have generally underperformed relative to the rest of the country in recent years (see Where’s the boom? And the rise and fall of the Alberta Advantage for some explanations).
Employment increased by 76.0k in January, stronger than expected and follows a robust increase in November and December last year. As a result of the higher employment, the unemployment rate eased to 6.6% from 6.7%, moderated by an increase in the participation rate to 65.5% from 65.4%. With the strong job gains, the employment rate, the share of the population holding a job, rose to 61.2% from 61.0%. Both the participation rate and the employment rate remain close to their lowest levels since the late 1990s, but are showing signs of bottoming out.
Wage growth for permanent workers decelerated to 3.7% from 3.8% y-o-y. The 3-month annualized change in seasonally-adjusted wages remained low at 1.0%, suggesting no major wage pressures in recent months.
The details show that the job gains were both in full-time (+35.2k) and part-time jobs (+40.9k). The higher employment in January was mostly in the private sector (+57.2k) and in self-employed (+27.4k, while public sector employment eased (-8.4k). Over the past year, about 25%% of job creation was in the public sector. Hours worked increased in January (+0.9% m-o-m), suggesting that economic activity was likely robust on the month.
On an industrial level, the employment gains were mainly in the goods-producing sector (+53.6k), but there were also robust job gains in the service sector (+22.5k).
The details in the good-producing sector show that the job gains were mainly in manufacturing (+33.1k), construction (+19.3k), and construction (+10.1k). Job losses in the natural resources sector (-5.6k) and utilities (-3.3k) offset some of these gains.
The increase in the service industries (+22.5k) was led by professional, scientific and technical services (+21.7k), accommodation and food services (+14.9k), and transportation and warehousing (+13.2k). These increases were partly offset by declines in other services (-13.9k), education (-7.9k), business, building and other support services (-7.4k), and finance, insurance and real estate (-5.2k).
At a provincial level, the increase in employment was concentrated in Ontario (+39.0k, +0.5% m-o-m), BC (+23.5k, +0.8% m-o-m), and Quebec (+15.7k, +0.3% m-o-m). There were some job losses in five provinces, led by Alberta (-4.3k, -0.2% m-o-m), Saskatchewan (-1.8k, -0.3% m-o-m), and Nova Scotia (-0.5k, -0.1% m-o-m).
The unemployment rate was lower in most provinces, except in Ontario (+0.1pp), BC (+0.1pp), and Newfoundland (+0.1pp). It eased the most in PEI (-1.3pp), New Brunswick (-1.3pp), Saskatchewan (-0.6pp), and Nova Scotia (-0.4pp).
The unemployment rate is the highest in Newfoundland (+10.6%), Ontario (+7.6%), PEI (7.2%), and Alberta (+6.7%). It is the lowest in Quebec (5.4%), Saskatchewan (5.4%), Nova Scotia (+5.9%), and BC (+6.0%).
Wages for permanent workers increased the most in Nova Scotia (+7.3% y-o-y), Newfoundland (+4.8% y-o-y), PEI (+4.6% y-o-y), and Manitoba (+4.4% y-o-y). It rose at the slowest pace in New Brunswick (+1.6% y-o-y), BC (+2.6% y-o-y), Ontario (+3.6% y-o-y), and Quebec (+3.8% y-o-y).
In Alberta, employment declined by 4.3k and followed two consecutive months of strong gains. Despite the small job losses, the unemployment rate remained at 6.7% due to a decline in the participation rate to 68.8% from 69.1%. Similarly, the employment rate, the share of the population holding a job, eased to 64.2% from 64.5. Wage growth for permanent workers jumped to 4.3% y-o-y. The 3m/3m annualized wage growth surged to 3.7%, ending a series of declines for this measure and suggesting the first increase in average wages for permanent workers since summer 2024.
The job losses in Alberta were mainly full-time (-21.4k), while there were part-time (+17.1k) gains. Employment was lower in the private sector (-2.5k) and self-employed (+2.2k), while there were some marginal gains in the public sector (+0.5k).
The employment losses were in both the service sector (-3.3k) and the goods-producing sector (-1.0k).
The decline in the goods-producing industry was mainly in natural resources extraction (-4.5k) and manufacturing (-1.7k), while agriculture (+3.4k) and construction (+1.9k) saw some gains.
The service sector decline was led by accommodation and food services (-5.4k), other services (-3.7k), trade (-3.5k), and health care (-2.9k. These decreases were partly offset by higher employment in professional, technical and scientific services (+7.9k) and transport and warehousing (+3.2k).
Statistics Canada has discontinued the regional data we used to rely on, and some of the details is not available.
On a regional basis, the province gained 82.5k jobs over the past 12-month. The increases were mainly in Calgary (+52.7k), Edmonton (+33.8k), and Camrose-Drumheller (+6.7k). while there were losses in Lethbridge-Medicine Hat (-4.9k), Western Alberta (-4.8k), and Wood Buffalo-Cold Lake (-3.3k).
The unemployment rate for the province was 6.6% on average over the past three months. The unemployment rate is the highest in Red Deer (7.9%), Calgary (+7.4%), and Edmonton (+7.4%). It is the lowest in Western Alberta (4.4%), Lethbridge-Medicine Hat (4.7%), Wood Buffalo-Cold Lake (5.8%), and Camrose-Drumheller (+5.9%).
Looking for more ? Subscribe now to receive Economic updates right to your inbox here!
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.