Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment eased unexpectedly in June, and the unemployment rate increased to its highest since January 2022. While the average job gains in recent months remain solid (around 30k), further slack in the labour market continues to build in the labour market.
Despite increasing slack, wage growth for permanent workers accelerated to 5.6%. We estimate that the 3-month annualized change of the seasonally-adjusted series was 5.7%, suggesting that acceleration resulted from a base effect and stronger wage increases in recent months. The acceleration in wage growth will attract the attention of the BoC. Still, as Gov Macklem explained in a recent speech, wages are a lagging indicator of the labour market, suggesting that the central bank believes it may take time for the increasing slack in the labour market to moderate wages growth.
Overall, with the labour report showing that the amount of slack in the economy is increasing, we think that another rate cut in July is warranted. Whether the BoC cuts in July will likely depend on further progress on the inflation front, with the next release on July 16th.
Alberta saw a gain in employment in June of 8.1k after a 20.4k drop in May. With the job gains and a decline in the participation rate, the unemployment rate eased to 7.1%.
Over the past year, the province has created 67k jobs and the momentum in recent months has been lacklustre. Moreover, the unemployment rate in Alberta remains higher than the national measure, in part due to the strong population growth. Wage growth in Alberta was unchanged at +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 eased by 1.4k in June, much weaker than expectations. With employment little changed, the unemployment rate edged higher to 6.4%, its highest since January 22022, 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 61.1% from 61.3%, its lowest since January 2022, as the population grew faster than employment.
Wage growth for permanent workers accelerated to 5.6% from 5.2% y-o-y. Part of the acceleration in wages was due to a base effect. However, the 3-month annualized change in seasonally-adjusted wages accelerated to 5.7%, suggesting stronger wage pressures in recent months are also pushing wage growth higher. Moreover, wage growth across a broad spectrum of measures remains elevated.
The details show that the job losses were mainly full-time (-3.4k) while there were marginal gains in part-time jobs (+1.9k). Moreover, the lower employment was mostly in the public sector (-14.6k), while there were gains in the private sector (+5.4k) and self-employed (+7.7k).
On an industrial level, the employment losses were all in the service sector (-14.1k), while jobs in the goods-producing sector saw a gain (+12.6k).
The details in the good-producing sector show that the job gains were mainly in agriculture (+12.3k), manufacturing (+4.2k), and natural resources (+3.0k). These increases were partly offset by losses in construction (-3.8k) and utilities (-3.0k).
The losses in the service industries were led by transport and warehousing (-11.7k), information, culture and recreation (-11.0k), trade (-10.3k), professional, technical and scientific (-10.0k), and public administration (-8.8k). These losses were offset by gains in accommodation and food services (+17.2k), education (+8.0k), and other services (+7.5k).
At a provincial level, employment was mixed. There losses in employment were in Quebec (-17.7k, -0.4% m-o-m), BC (-9.7k, -0.3% m-o-m), and Nova Scotia (-1.7k, -0.3% m-o-m). The biggest job gains were in Ontario (+9.8k, +0.1% m-o-m), Alberta (+8.1k, +0.3% m-o-m), Manitoba (+3.1k, +0.4% m-o-m), New Brunswick (+3.0k, +0.8% m-o-m), and Newfoundland (+2.6k, +1.1% m-o-m),
Most provinces saw a rise in the unemployment rate, except for Newfoundland (-0.7pp), Alberta (-0.1pp), and Saskatchewan (-0.1pp). It rose the most in PEI (+0.9pp), Quebec (+0.6pp) and Ontario (+0.3pp).
The unemployment rate is the highest in Newfoundland (+9.2%), PEI (8.0%), New Brunswick (7.7%), and Alberta (+7.1%). It is the lowest in Manitoba (5.1%), BC (5.2%), Saskatchewan (5.5%), and Quebec (5.7%).
Wages for permanent workers increased the most in Nova Scotia (+9.8% y-o-y), BC (+7.2% y-o-y), New Brunswick (+6.2% y-o-y), and Ontario (+5.5 y-o-y). It rose at the slowest pace in Saskatchewan (+3.4% y-o-y), Newfoundland (+3.7% y-o-y), PEI (4.6% y-o-y), and Alberta (+5.0% y-o-y).
In Alberta, employment increased 8.1k, partly offsetting the 20.4k decline seen the prior month. As a result of the job gain, the unemployment rate eased to 7.1% from 7.2%. The participation rate also edged lower to 69.3% from 69.4%. The employment rate, the share of the population holding a job, eased to 64.3%, its lowest since August 2021. Wage growth for permanent workers was unchanged at 5.0% y-o-y, and continues to underperform the rest of the country.
The job gains in Alberta were both full-time (+5.7k) and part-time (+2.4k). There was higher employment in the private sector (+6.1k) and self-employment (+3.0k), while there was a loss in self-employed (-1.0k). The higher employment was mainly in the goods-producing sector (+8.7k), while the service sector was almost unchanged (-0.6k).
The increase in the goods-producing industry was mainly in natural resources (+4.5k), agriculture (+4.4k) and utilities (+1.3k), while there were some losses in construction (-0.8k) and manufacturing (-0.7k).
The service sector saw losses in professional, technical, and scientific (-5.0k), business building and support services (-3.9k), information, culture and recreation (-3.3k), transport and warehousing (-2.9k), and public administration (-2.1k). These declines were partly offset by increases in education (+8.4k), accommodation and food services (+3.6k), health care (+3.2k), and finance, insurance and real estate (+3.2k).
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 0.9k jobs each month on average. The decreases were mainly in Calgary (-5.1k), Edmonton (-0.6k) and Camrose-Drumheller (-0.1k), while there were gains elsewhere led by Western Alberta (+4.1k), Lethbridge-Medicine Hat (+1.4k), and Wood Buffalo-Cold Lake (+1.1k).
The unemployment rate for the province was unchanged at 7.1% on average over the past three months. The unemployment rate edged higher in Calgary (+0.1pp) and Edmonton (+0.1pp) while there was some easing elsewhere led by Camrose-Drumheller (-0.6pp), Red Deer (-0.3pp), and Lethbridge-Medicine Hat (-0.3pp).
The unemployment rate is the highest in Calgary (8.1%), Red Deer (7.3%), and Edmonton (7.1%). It is the lowest in Camrose-Drumheller (4.3%), Western Alberta (5.3%), Lethbridge-Medicine Hat (5.3%) and Wood Buffalo-Cold Lake (5.5%).
The employment rate for Alberta declined to a level of 64.7% over the past three months as employment grows more slowly than population. The employment rate deteriorated mainly in Calgary (-0.6pp), Edmonton (-0.4pp), and Camrose-Drumheller (-0.2pp). It improved only in Western Albert (+1.2pp), Wood Buffalo-Cold Lake (+0.7pp) and Lethbridge-Medicine Hat (+0.4pp).
[1] All the numbers are expressed as three-month average of the non-seasonally adjusted number.
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Independent Opinion
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