Canadian labour market still tight as economy sees slight bump in employment
The Canadian economy posted a modest gain in employment in September, reversing some of the losses seen in previous months and suggesting the labour market remains exceptionally tight.
The unemployment rate for the month fell to 5.2 per cent as fewer people looked for work, down from 5.4 per cent the previous August, Statistics Canada reported in its labour force survey released on Friday.
Meanwhile,the economy added 21,000 jobs.
The bumpin employment was expected as job losses in the education sector during the summer were reversed with the reopening of schools.
The report said gains in education, health care and social assistance were offset by losses in several other sectors, including manufacturing and information, culture and recreation.
Canada's labour force participation rate -- the percentage of people who want and are looking for a job -- edged down slightly by 0.1 per cent in September.
The rise in employment comes after three consecutive months of job losses in the Canadian economy.
The latest jobs numbers reinforce that the labour market is still very tight, said TD director of economics James Orlando.
"We still have lots of job vacancies out there, we still have a supply-demand imbalance for labour in Canada," Orlando said.
As the Bank of Canada raises interest rates aggressively to tame high inflation, the Canadian economy is expected to feel the effects of higher interest rates both in its economic growth and employment numbers.
The central bank has suggested tight labour markets are partly to blame for high inflation.
"We're a long way from that being fixed," Orlando said.
Since March, the Bank of Canada has raised its key interest rate from 0.25 to 3.25 per cent, one of the fastest rate hike cycles in its history. With inflation still running well above its two per cent target, the central bank is expected to deliver another rate increase on Oct. 26.
As more sectors of the economy begin to feel the cooling effects of higher interest rates, TD is forecasting unemployment will rise to 5.6 per cent this year and will later peak at 6.5 per cent.
Friday's report also showed that wages are continuing to grow, though at a slower pace than the cost of living. In September, wages were up by 5.2 per cent compared with a year ago, with the average hourly wage at $31.67.
It marked the fourth straight month of five per cent or higher wage growth.
In August, the annual inflation rate was seven per cent.
Indeed senior economist Brendon Bernard said the recent gain in wages "has been a long time coming."
"The stronger wage growth we've seen is in response to the surge in inflation and employers at least partially offsetting the rising cost of living through larger paychecks," Bernard said.
The Bank of Canada is monitoring the pace of wage growth over risks of a wage-price spiral, where higher prices lead to higher wages and vice versa.
The report also looked at retirement among Canadians under the age of 65, one key factor in the apparent shortage of workers. Nearly one million Canadians between the ages of 55 and 64 said they were retired in September.
Over the last 20 years, the labour force participation rate has fallen steadily, largely due to an aging population.
The federal agency said since September 2019, the number of Canadians aged 65 and older grew by 11.6 per cent, while the working-age population grew by 3.5 per cent.
Bernard said economic cycles have largely been driving labour market tightness, but that the aging population trend "is constantly in the background."
As children headed back to school in September, the report also examined the effect of childcare responsibilities on career decisions. Despite a record-high employment rate, women between the ages of 25 and 54 with children under the age of 16 were twice as likely to decide not to apply for a job or promotion over the last year than their male counterparts.
Women were also twice as likely as men to report helping their children with homework and home-schooling most or all of the time.
This report by The Canadian Press was first published Oct. 7, 2022.
As inflation continues to take its toll, some Canadians may also start taking a closer look at their spending habits. In 2019, only around half of Canadians said they had a budget, according to a survey by the Financial Consumer Agency of Canada.
The Bank of Canada hiked its key policy rate by half a percentage point to 4.25 per cent -- the highest it's been since January 2008 -- on Wednesday in its final rate decision of a year that has been marked by stubbornly high inflation and rapidly increasing interest rates.
Canadians hoping to purchase a home are being turned away from traditional banks, forcing them to seek out alternative lenders with pros and cons.
opinion | How to get the increased GST tax credit
To help combat inflation and help lower- and modest-income families, over the span of six months, Ottawa is issuing an additional one-time GST tax credit to eligible taxpayers. Personal finance contributor Christopher Liew breaks down who's eligible for the increased GST credit, explain how to get it, and how much you could receive.
Canadians' budgets are being stretched thin as the cost of living climbs -- and to compensate, some are taking on a side hustle.
Food prices in Canada will continue to escalate in the new year, with grocery costs forecast to rise up to seven per cent in 2023, new research predicts.
Nine out of 10 Canadians believe there could be a recession in 2023, according to a new national survey, with four out of 10 calling it 'likely.'
At first glance, it might seem like the deals have never been better as posters in store windows and online ads trumpet a steady stream of holiday sales. But some consumers say the discounts are more hype than real.