Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment increased 7.4k in April, marginally better than expected. However, the unemployment rate edged higher to 6.9%. The details shows that the trade war with the US is taking a toll on employment with a decline of 31k jobs in the manufacturing sector, the biggest decline since 2009, if COVID is excluded. On the flip side, job in public administration surged 37k due to temporary hiring for the federal election.
Wage growth for permanent workers was unchanged at 3.5%, unchanged from the previous month. However, we estimate that the 3-month annualized change of the seasonally-adjusted series was 1.9%, suggesting modest wage gains in recent months.
Overall, the deterioration of the labour market may be signalling the start of a possible recession in Canada due to the US tariffs. As seen in recent weeks, the extreme uncertainty has had a significant negative impact on business sentiment, lowering hiring intentions.
The report confirms that the US tariffs are having an important impact on Canada’s labour market. If it was not for the hiring for the federal election, Canada would have seen another month of job losses. This weakness in the labour market is likely to continue in the coming months, as many manufacturers continues to announce reduction in production and work shifts. The question for the Canadian economic outlook is how severe the job losses will be. As the BoC pointed to in the Financial System Review, and something we have been saying the same since Fall 2023(see Will it be a hard landing or a soft landing? The labour market will decide), severe job losses could lead to a much deeper economic contraction because of its impact on heavily indebted households.
The further weakening of the labour market increases the likelihood that the BoC will cut its policy rate at the June meeting. However, the most recent CPI number, while positive on the surface, hid some concerning trend, especially a broadening of inflationary pressures. While we think the balance of risk is likely toward a cut in June, the next CPI released on May 20th could be a deciding factor.
Alberta saw a 15.0k increase in employment, almost fully reversing the decline in March. Nevertheless, the province has lost 6.9k jobs so far this year. The unemployment rate increased to 7.1%, above the national measure.
Wage growth in Alberta decelerated sharply to 1.6% y-o-y from 3.7% y-o-y and was back at underperforming the rest of the country and the 3-month annualized change of the seasonally-adjusted series was -6.1%, suggesting a drop in average wages in recent months. 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 7.4k in April, marginally higher than expected. Despite the increase in employment, the unemployment rate rose to 6.9% because the labour force increased faster than the employment. The increase in the unemployment rate was somewhat amplified by an increase in the participation rate to 65.3% from 65.2%. The employment rate, the share of the population holding a job, eased to 60.8%. Both the participation rate and the employment rate remain close to their lowest levels since the late 1990s.
Wage growth for permanent workers remained at 3.5% y-o-y. The 3-month annualized change in seasonally-adjusted wages grew to 1.9% from 1.3%, suggesting weaker wage pressures in recent months.
The details show that the job gains were in full-time jobs (+31.5k) while there was a loss in part-time (-24.2k). The lower employment in April was mostly in the private sector (-26.8k), while the public sector (+22.9k), self-employed (+11.2k) employment increased. Over the past year, about 25% of job creation was in the public sector. Hours worked remained the same in April (+0.4% m-o-m), suggesting that economic activity rose on the month.
On an industrial level, there were job losses in the goods-producing sector (-33.0k) and gain in the service sector (+40.3k).
The details in the goods-producing sector show that the job losses were mainly in manufacturing (-30.6k), natural resources (-7.5k), and construction (-1.8k). They were partly offset by increases in utilities (3.9k) and agriculture (2.9k).
The increase in the service industries (+40.3k) was led by public administration (+37.1k), finance, insurance, real estate and leasing (+23.7k), information, culture and recreation (+12.6k), and transport and warehousing (+8.2k). These increases were partly offset by decreases in trade (-26.8k), business, building and other support service (-14.5k), and accommodation and food services (-8.5k).
At a provincial level, the increase in employment was concentrated in Quebec (+18.3k, +0.4% m-o-m), Alberta (+15.0k, +0.6% m-o-m), BC (+6.0k, +0.2% m-o-m), and Manitoba (+5.7k, +0.8% m-o-m). There were some job losses in three provinces, led by Ontario (-34.6k, -0.4% m-o-m), Nova Scotia (-1.2k, -0.3% m-o-m), and New Brunswick (-1.2k, -1.6% m-o-m).
The unemployment rate grew slightly at the national level but saw some slight increases in four provinces, led by Nova Scotia (+1.1pp), Quebec (+0.3pp), Ontario (+0.3pp), BC (+0.1pp). PEI (-0.9pp), Manitoba (-0.7pp), Saskatchewan (-0.6pp), and Newfoundland (-0.4pp) saw a decline in the unemployment rate.
The unemployment rate is the highest in Newfoundland (+9.6%), Ontario (+7.8%), Nova Scotia (+7.2%), Alberta (+7.1%) and New Brunswick (+6.9%). It is the lowest in Saskatchewan (+4.3%), and Manitoba (+5.3%).
Wages for permanent workers remain constant nationwide. It increased most in Newfoundland (+6.5% y-o-y), Nova Scotia (+5.2% y-o-y), BC (+4.6% y-o-y), and Ontario (+4.3% y-o-y). It rose at the slowest pace in PEI (+0.0% y-o-y), and Alberta (+1.6% y-o-y), and Manitoba (+2.1% y-o-y)
Looking at CMAs, Employment grew the most over the past year in Kamloops (+33.4% y-o-y), Red Deer (+10.2% y-o-y), St. Catherines-Niagara (+9.5% y-o-y). However, the lowest-performing cities were Nanaimo (-10.4% y-o-y), Kelowna (-9.2 y-o-y), and Saint John (-9.0% y-o-y).
The unemployment rate was the highest in Peterborough (+10.8%), Windsor (+10.7%), Toronto (+8.6%). While the lowest rates are in Belleville (+1.9%), Victoria (+3.6%), Thunder Bay (+4.2%) and Quebec (+4.2%).
In Alberta, employment increased by 15.0k in April, partly reversing the decline seen in March. Despite the job gain, the unemployment rate remained unchanged at 7.1, as the participation rate increased to 68.5% from 68.3%. Similarly, the employment rate, the share of the population holding a job, rose to 63.6% from 63.4%. Wage growth for permanent workers slowed meaningfully to 1.6% y-o-y. The 3m/3m annualized wage growth dropped to -6.1%, suggesting a strong decline in average wages for permanent workers in April.
The job gains in Alberta were mainly full-time (+14.1k), while they were more modest for part-time (+0.9k). Employment was higher mainly in the private sector (+16.4k), while there were marginal gains in the public sector (+0.4k) and a small decline in self-employed (-1.7k).
The employment gains were mainly in the service sector (+13.7k) with smaller increases in the goods-producing sector (+1.2k).
The increase in the goods-producing industry was mainly in manufacturing (+5.6k), construction (+2.0k) and utilities. These increases were partly offset but declines in natural resources (-6.1k) and agriculture (-1.5k).
The service sector gain was led by information, culture, and recreation (+5.1k), public administration (+4.6k), accommodation and food services (+3.0k), and finance, insurance and real estate (+3.0k). These increases were partly offset by professional, scientific and technical services (-7.3k) and trade (-3.3k).
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 0.1k jobs each month on average. The decreases were mainly in Calgary (-7.1k), while there were gains in Red Deer (+3.0k), Edmonton (+2.3k) and Lethbridge-Medicine Hat (+2.1k).
The unemployment rate for the province rose to 6.9% on average over the past three months. The unemployment rate increased in most regions, except in Edmonton (-0.2pp) and Camrose-Drumheller (+0.2pp). The biggest increases were in Lethbridge-Medicine Hat (+1.1pp), Wood Buffalo-Cold Lake (+0.5pp), and Wester, Alberta (+0.3pp).
The unemployment rate is the highest in Calgary (+7.1%), Red Deer (+6.9%), and Lethbridge-Medicine Hat (6.9%). It is the lowest in Camrose-Drumheller (5.3%), Western Alberta (5.8%) and Wood Buffalo-Cold Lake (6.1%).
The employment rate for Alberta eased to 63.7% over the past three months. The employment rate improved the most in Red Deer (+1.5pp), Lethbridge-Medicine Hat (+0.7pp) and Wood Buffalo-Cold Lake (+0.5pp). It decreased in Calgary (-0.7pp), and Western Alberta (-0.1pp).
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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.