Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud. This report includes regional details for Alberta.

Bottom line

Today’s Labour Force Survey data points to another solid gain in employment in Canada. However, job creation remains below population growth, leading to a slight increase in the unemployment rate and an easing in the employment rate,  suggesting a small increase in the amount of slack in the economy.

The report also showed that wage growth for permanent workers eased to 4.9%. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series eased to 2.7%. Moreover, a wide range of wage measures eased in January, suggesting that the accumulated slack in the labour market could finally be holding back wage growth.

The Bank of Canada will welcome the slower pace of wage growth, even though it continues to grow at levels that are disconnected from productivity gains. Moreover, there are increasing signs that the slack built up in the labour market over the past year is helping to ease some of the wage pressures.

Comments from the Bank of Canada following its latest rate decision suggest that inflation, especially its measure of core inflation, remains key for the timing of the first rate cut. We think the BoC is unlikely to contemplate rate cuts until core inflation and its momentum have been brought sustainably below 3%. We expect this to happen around April or May, opening the door to a rate cut at the June meeting.

Whether the country experiences a soft or hard landing depends heavily on the health of the evolution of the labour market ie whether we see a hiring freeze or broad-based layoffs as the economic activity slows further (see Will it be a hard landing or a soft landing? The labour market will decide). So far, there are no signs of a significant deterioration in the labour market.

Alberta saw another solid increase in employment in February of 17.4k. The unemployment rate remained steady despite the robust job gain because of a sharp inflow of workers into the labour force.

Over the past year, the province has created almost 100k jobs, more than a quarter of Canada’s gain and more than any other province over the period. However, the unemployment rate in Alberta remains higher than the national measure, partly due to the strong population growth. Moreover, wage growth in Alberta (+3.5% y-o-y) continued underperforming 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 40.7k in January, stronger than expectations. Despite the solid gain in employment, the unemployment rate increased to 5.8%, as the labour force grew faster than employment. The employment rate, the share of the population holding a job, edged lower to 61.5% from 61.6%, resulting from stronger population growth than employment growth.

Wage growth for permanent workers eased to 4.9% from 5.3% y-o-y. Moreover, the 3-month annualized change in seasonally-adjusted wages eased to 2.7%, suggesting that wage growth continues to decelerate after some months of solid increases. Moreover, wage growth across a broad spectrum of measures is also easy, but remains elevated.

The details show that gains in full-time jobs (+70.6k) in February more than fully reversed the losses in part-time jobs (-29.9k). Moreover, the higher employment was mostly in self-employed (+38.3k) and the public sector (+18.8k), while once again, there were losses in the private sector (-16.4k).

On an industrial level, the employment gains were all in the service sector (+46.9k), while jobs in the goods-producing sector declined (-6.3k).

The details in the good-producing sector show that the job losses were in manufacturing (-13.9k) and agriculture (-6.0k). These declines were partly offset by a gain in construction (+10.5k) and natural resources (+3.9k).

There were solid gains in many of the service industries led by accommodation and food services (+26.2k), professional, scientific and technical (+17.9k), other services (+10.8k), and transport and warehousing (+9.4k), Losses in education (-17.0k), trade (-16.8k), and business, building and support services (-13.2k)  partly offset the gains.

At a provincial level, the job gains were mainly seen in Alberta (+17.4k, +0.7% m-o-m), Quebec (+8.8k, +0.2% m-o-m), Ontario (6.7k, +0.1% m-o-m), and Nova Scotia (+6.3k, +1.2% m-o-m). There were losses in Manitoba (-5.3k, -0.7% m-o-m) and Newfoundland (-1.8k, -0.7% m-o-m).

Most provinces saw a rise in the unemployment rate in February, with the biggest increases in Manitoba (+0.5pp), Saskatchewan (+0.3pp), Ontario (+0.3pp), and New Brunswick (+0.3pp). The unemployment rate eased in Nova Scotia (-1.0pp), PEI (-0.4pp), and BC (-0.2pp).

The unemployment rate is the highest in Newfoundland (+10.2%), PEI (7.0%), New Brunswick (+6.9%), and Ontario (6.5%). It is the lowest in Manitoba (4.5%), Quebec (4.7%), Saskatchewan (5.0%), and BC (+5.2%).

Wages for permanent workers increased the most in BC (+7.0% y-o-y), Nova Scotia (+6.3% y-o-y), Ontario (+6.0% y-o-y), and New Brunswick (+5.6% y-o-y). It increased at the slowest pace in Saskatchewan (+2.3% y-o-y), Quebec (+2.9% y-o-y), Manitoba (+3.5% y-o-y), and Alberta (3.5% y-o-y).

In Alberta, employment increased 17.4k in February. Despite the robust job gain the unemployment rate was unchanged at 6.2%, as the participation rate increased to 69.8% from 69.6%. The employment rate, the share of the population holding a job, rose to 65.5%.

The job gains in Alberta were mainly in the private sector (+17.0k), with a small increase in the public sector (+1.4k) and a small loss in self-employed (-0.9k). The employment gain was split between the goods-producing sector (+9.7k) and the services sector (+7.8k)

The increase in the goods-producing industry was mostly in the construction sector (+12.0k), while there were some modest losses in utilities (-2.2k) and natural resources (-1.3k).

The higher employment in the service sector mainly came from trade (+11.5k), professional, scientific and technical (+7.4k), and business, building and support services (+6.5k). These gains were partly offset by lower employment in health care (6.9k), education (+6.6k), and information, culture and recreation (+5.2k).

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 gained 15.9k jobs each month on average. The increases were mainly in Edmonton (+7.5k), Calgary (+4.8k), and Red Deer (+3.6k), while employment declined by 1.6k.

The unemployment rate for the province rose to 6.5% on average over the past three months, with increases in all regions except in Red Deer (-1.3pp). The biggest increases were in Lethbridge-Medicine Hat (+0.8pp), Camrose-Drumheller (+0.7pp), and Calgary (+0.6pp). The unemployment rate is the highest in Lethbridge-Medicine Hat (8.2%), Edmonton (+7.0%) and Red Deer (+6.9%). It is the lowest in Camrose-Drumheller (4.8%), Western Alberta (+4.8%), and Wood Buffalo-Cold Lake (5.0%).

The employment rate for Alberta edged higher to 65.2%. The employment rate improved the most in Red Deer (+1.7pp), Edmonton (+0.3pp), and Camrose-Drumheller (+0.3pp). It decreased in Wood Buffalo-Cold Lake (-1.6pp) and Lethbridge-Medicine Hat (-0.2pp).

[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.