Economic commertary provided by Alberta Central Chief Economist Charles St-Arnaud. This report includes regional details for Alberta.
Bottom line
The employment gain in May was slightly below the average gains seen in recent months, while the unemployment edged higher, suggesting further slack is building in the labour market.
However, wage growth for permanent workers accelerated to 5.2%. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series was 5.0%, suggesting that acceleration was not the result of a base effect and due to stronger increases in wages in recent months.
Wage growth returning above 5% is likely to attract some attention from the BoC, especially given it goes against its expectations for some moderation and could hinder the pace of moderation in inflation. However, the increase in the amount of slack in the labour market also suggests that wage pressures should ease in the second half of the year.
Overall, we believe the labour report will have, on balance, little impact on the BoC. The language from the BoC earlier this week suggests that as long as inflation continues to moderate and remains consistent with the inflation target, especially the momentum in measure of core, further easing in monetary policy is likely. Whether the next cut is in July will likely depend more on the upcoming inflation report than the evolution of the labour market. However, continued upside pressures on wages could become a concern for the BoC, as it could lead to more persistent inflation.
Alberta saw a drop in employment in May of 20.4k. With the job loss and despite a decline in the participation rate, the unemployment rate rose to 7.2%, its highest level since November 2021.
Over the past year, the province has created 66k jobs, but the unemployment rate in Alberta remains higher than the national measure, partly due to the strong population growth. Wage growth in Alberta accelerated to +5.0% y-o-y, but continued to underperform against the rest of the country (see Where’s the boom? And the rise and fall of the Alberta Advantage for some explanations).
Employment rose by 26.7k in May, in line with expectations. Despite the employment gain, the unemployment rate edged higher to 6.2%, as labour force continued to increase at a faster rate than job growth. The employment rate, the share of the population holding a job, eased to 61.3% from 61.4%, as the population grew faster than employment.
Wage growth for permanent workers accelerated to 5.2% from 4.8% y-o-y, returning above 5%. The 3-month annualized change in seasonally-adjusted wages accelerated to 5.0%, suggesting that the increase in the y-o-y change was not the result of a base effect. Moreover, wage growth across a broad spectrum of measures also accelerated and remains elevated.
The details show that the job gains were mainly part-time (+62.4k) while there were losses in full-time jobs (-35.6k). Moreover, the higher employment was mostly in the private sector (+17.6k) and self-employed (+16.6k), while there were losses in the public sector (-7.5k).
On an industrial level, the employment gains were all in the service sector (+47.4k), while jobs in the goods-producing sector saw a loss (-20.7k).
The details in the good-producing sector show that the job losses were mainly in construction (-29.6k) and utilities (-5.4k). These declines were partly offset by gains in manufacturing (+8.1k), agriculture (+3.2k), and natural resources (+3.0k).
The gains in the service industries were led by health care (+29.9k), finance, insurance and real estate (+28.8k), business, building and support services (+18.7k), and accommodation and food services (+12.9k). These gains were offset by losses in transport and warehousing (-20.6k), education (-12.1k), information, culture and recreation (-10.8k), and trade (-6.3k).
At a provincial level, employment was mixed. The gains in employment were in Ontario (+49.5k, +0.6% m-o-m), Manitoba (+7.8k, +1.1% m-o-m), and Saskatchewan (+5.4k, +0.9% m-o-m). The biggest job losses were in Alberta (-20.4k), -0.8% m-o-m), BC (-7.9k, -0.3% m-o-m), Newfoundland (-2.1k, -0.9% m-o-m), and PEI (-1.1k, -1.2% m-o-m).
Despite the gains in employment at the national level, the unemployment rate was mixed at the provincial level. The unemployment rate rose in Newfoundland (+0.8pp), BC (+0.6pp), New Brunswick (+0.5pp), PEI (+0.3pp), Nova Scotia (+0.3pp), and Alberta (+0.2pp). It declined in Manitoba (-0.2pp), Ontario (-0.1pp), and Saskatchewan (-0.1pp).
The unemployment rate is the highest in Newfoundland (+9.9%), New Brunswick (7.5%), Alberta (+7.2%), and PEI (7.1%). It is the lowest in Manitoba (4.9%), Quebec (5.1%), Saskatchewan (5.6%), and BC (5.6%).
Wages for permanent workers increased the most in Nova Scotia (+8.4% y-o-y), BC (+8.0% y-o-y), Quebec (+5.2% y-o-y), and PEI (+5.0 y-o-y).
It rose at the slowest pace in Saskatchewan (+3.1% y-o-y), New Brunswick (4.0% y-o-y), Ontario (4.3% y-o-y), and Manitoba (+4.6% y-o-y).
In Alberta, employment dropped 20.4k in April. As a result, the unemployment rate rose to 7.2% from 7.0%, despite a decline in the participation rate to 69.4% from 70.1%. This is the highest unemployment rate since November 2021. The employment rate, the share of the population holding a job, eased to 64.4%, its lowest since November 2021. Wage growth for permanent workers accelerated to 5.0% y-o-y, and continues to underperform the rest of the country.
The job losses in Alberta were mainly full-time (-33.2k) and in the public sector (-13.0k) and private sector (-11.5k), while there was a gain in self-employed (+4.1k). The lower employment was mainly in the goods-producing sector (-20.3k), while the service sector was almost unchanged (-0.2k).
The decline in the goods-producing industry was mainly in construction (+20.3k), agriculture (-5.5k), and utilities (-4.4%), while there were some gains in manufacturing (+8.3k) and natural resources (+1.6k).
The service sector saw gains in accommodation and food services (+8.0k), public administration (+3.1k), business, building and support services (+2.0k), transportation and warehousing (+1.7k), and information, culture and recreation (+1.7k) being offset by losses in trade (-7.1k), health care (-5.3k), finance, insurance and real estate (-3.4k), and professional, scientific and technical (-1.3k).
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 1.5k jobs each month on average. The decreases were mainly in Edmonton (-3.4k), Camrose-Drumheller (-2.6k), Lethbridge-Medicine Hat (-0.9k) and Western Alberta (-0.8k), while there were gains in Calgary (+5.8k).
The unemployment rate for the province rose to 7.1% on average over the past three months. The biggest increases were in Red Deer (+1.0pp), Camrose-Drumheller (+0.5pp), Western Alberta (+0.2pp), and Edmonton (+0.2pp)., while it declined in Lethbridge-Medicine Hat (-0.3pp) and Wood Buffalo-Cold Lake (-0.1pp).
The unemployment rate is the highest in Calgary (8.0%), Red Deer (7.6%), and Edmonton (7.0%). It is the lowest in Camrose-Drumheller (4.9%), Western Alberta (5.5%), Lethbridge-Medicine Hat (5.6%) and Wood Buffalo-Cold Lake (5.7%).
The employment rate for Alberta declined to a level of 65.0% over the past three months. The employment rate deteriorated in all regions, led by Camrose-Drumheller (-1.6pp), Edmonton (-0.5pp), Lethbridge-Medicine Hat (-0.5pp), and Western Alberta (-0.4pp). It improved only in Calgary (+0.1pp).
[1] All the numbers are expressed as three-month average of the non-seasonally adjusted number.
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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.