Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment increased by a meagre 1.1k in February, much weaker than expected. Despite the weak job gain, the unemployment rate remained 6.6%. It is important to note that the labour market underperformance comes after adding 210k jobs between November and January and that job gains have averaged 56k per month over the past 3 months.
Wage growth for permanent workers accelerated to 4.0%, above expectations. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 4.2%, suggesting that most of the acceleration is due to stronger wages in recent months.
Overall, the weakness in February seems to be a return to normal. It will be interesting to see in next month’s report what impact the extreme uncertainty caused by the US tariffs will have on the labour market. With that, it is important to note that the amount of slack remains substantial, with the unemployment rate close to 7% and the participation rate and employment rate close to their lowest level since the late 1990s.
Today’s release solidifies our view that the Bank of Canada will cut at next week’s meeting. Even with delayed tariffs, the extreme uncertainty seen in recent months is having a negative impact on the economy. As a result, we think a 25bp cut would be appropriate on Wednesday and that more rate cuts should be expected this year.
Alberta saw a 2.2k decline in employment after a small loss in January. Despite the lower employment, the unemployment rate remained unchanged at 6.7% due to a decline in the participation rate. Alberta’s unemployment is now in line with the national measure, after being amongst the highest for most of 2024. We also note that the employment rate also eased in February.
Wage growth in Alberta remained strong in February to 4.2 and outperformed slightly relative to the rest of the country for a second consecutive month and the 3-month annualized change of the seasonally-adjusted series was 4.8%, 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 increased by a meagre 1.1k in February, lower than expected and follows robust increases since November last year. Despite the stagnant employment, the unemployment rate remained at 6.6%, held back by an decrease in the participation rate to 65.3% from 65.5%. The employment rate, the share of the population holding a job, stayed at 61.1%, suggesting that working-age population growth was weak on the month (+0.1% m-o-m). 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 accelerated to 4.0% from 3.7% y-o-y. The 3-month annualized change in seasonally-adjusted wages increased to 4.2% from 1.0%, suggesting major wage pressures in recent months.
The details show that the job gains were in part-time jobs (+20.8k) while there was a loss in full time (-19.7k). The lower employment in February was mostly in self-employed (-16.8k), while private sector (+10.2k) and public sector (+7.6k) employment increased. Over the past year, about 25% of job creation was in the public sector. Hours worked decreased in February (-1.3% m-o-m), suggesting that economic activity was likely weak on the month. However, Statistics Canada mentioned in the release that the decline in hours worked was mainly due to snowstorms in Eastern Canada.
On an industrial level, the employment gains were mainly in the service sector (+20.6k), while there were job losses in the goods-producing sector (-19.5k).
The details in the good-producing sector show that the job loss were mainly in all sectors, utilities (-7.8k), construction (-5.0k), manufacturing (-4.8k), agriculture (-1.2k), and natural resources sector (-0.7k).
The increase in the service industries (+20.6k) was led by a surge in trade (+50.8k), and gains in finance, insurance and real estate (+15.6k), and public administration (+4.4k). These increases were partly offset by declines in professional, scientific and technical services (-32.9k), transportation and warehousing (-23.0k), and other services (-9.7k).
At a provincial level, the increase in employment was concentrated in Ontario (+19.9k, +0.2% m-o-m), while there were some marginal gains in Manitoba (+0.9k, +0.1% m-o-m), and Saskatchewan (+0.5k, +0.1% m-o-m). There were some job losses in seven provinces, led by BC (-4.9k, -0.2% m-o-m), Nova Scotia (-4.3k, -0.8% m-o-m), and Quebec (-3.4k, -0.1% m-o-m).
The unemployment rate was unchanged at the national level but saw some sharp increased in some provinces, led by New Brunswick (+1.1pp), Nova Scotia (+0.7pp), PEI (+0.6pp). Only Ontario (-0.3pp), Quebec (-0.1pp), and Newfoundland (-0.1pp) saw a decline in the unemployment rate.
The unemployment rate is the highest in Newfoundland (+10.5%), PEI (+7.8%), New Brunswick (+7.5%), Ontario (+7.3%) and Alberta (+6.7%). It is the lowest in Quebec (+5.3%), Saskatchewan (5.4%), BC (+6.0%), and Manitoba (+6.1%).
Wages for permanent workers increased the most in Newfoundland (+6.8% y-o-y), Nova Scotia (+6.0% y-o-y), Manitoba (+5.4% y-o-y), and Ontario (+4.3% y-o-y). It rose at the slowest pace in Alberta (+4.1% y-o-y), Quebec (+3.6% y-o-y), Saskatchewan (+3.3% y-o-y), New Brunswick (+3.1% y-o-y), PEI (+2.8% y-o-y), and BC (+2.8% y-o-y).
In Alberta, employment decreased by 2.2k, a second consecutive decline. Despite the small job losses, the unemployment rate remained at 6.7% due to a decline in the participation rate to 68.6% from 68.8%. Similarly, the employment rate, the share of the population holding a job, eased to 64.0% from 64.2%. Wage growth for permanent workers remained robust at 4.2% y-o-y. The 3m/3m annualized wage growth surged to 4.8%, suggesting a strong increase in average wages for permanent workers in recent months.
The job losses in Alberta were mainly part-time (-18.1k), while there were full-time (+15.9k) gains. Employment was lower in the private sector (-4.0k) and self-employed (-1.4k), while there were some gains in the public sector (+3.1k).
The employment losses were in both the goods-producing sector (-1.3k) and the service sector (-1.0k).
The decline in the goods-producing industry was mainly in manufacturing (-6.9k, while construction (+3.8k) saw some gains.
The service sector decline was led by other services (-8.2k), business, building and other support services (-7.7k), and health care (-5.4k). These decreases were partly offset by higher employment in accommodation and food services (+8.7k), trade (+7.4k), and professional, technical and scientific services (+3.5k).
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 gained 8.6k jobs each month on average. The increases were mainly in Calgary (+14.5k), Lethbridge-Medicine Hat (+1.5k) and Camrose-Drumheller (+1.0k), while there were losses in Edmonton (-4.7k), Western Alberta (-2.4k), and Red Deer (-0.7k).
The unemployment rate for the province eased to 6.6% on average over the past three months. The unemployment rate edged lower in most regions, except in Lethbridge-Medicine Hat where it increased to (+0.8pp). The biggest easings were in Camrose-Drumheller (-0.7pp), Calgary (-0.5pp), and Edmonton (-0.3pp).
The unemployment rate is the highest in Red Deer (7.3%), Calgary (+7.1%), and Edmonton (+7.1%). It is the lowest in Western Alberta (4.7%), Lethbridge-Medicine Hat (4.7%), and Wood Buffalo-Cold Lake (5.6%).
The employment rate for Alberta was unchanged at 64.3% over the past three months. The employment rate improved the most in Calgary (+0.7pp), Camrose-Drumheller (+0.5pp). It decreased the most in Western Alberta (-0.9pp), Edmonton (-0.5pp), and Red Deer (-0.5pp).
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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.