Canada’s job gains shift into lower gear

Article content

Canadian employers added roughly 31,000 jobs in October, a mediocre result that suggests the recovery from the COVID-19 recession could be slowing to a more sustainable pace.

Article content

Bay Street economists had predicted the economy would add about 50,000 positions last month, after creating more than 157,000 in September as COVID restrictions loosened and vaccination rates continued to rise. The increase that Statistics Canada recorded in its latest Labour Force Survey was less than the poll’s margin of error, suggesting employment was little changed.

The unemployment rate decreased to 6.7 per cent from 6.9 per cent, the fifth consecutive monthly decline. Employment in retail increased by some 77,000 positions, a large gain that pushed jobs in the industry back above pre-pandemic levels for the first time since March 2021, the eve of another wave of COVID-19 infections that forced provinces to tighten social distancing rules.

Article content

Average hourly wages were up 5.1 per cent from 2019, according to a gauge that Statistics Canada uses to smooth out volatility caused by the recession. Wage growth at that pace implies that many households have received pay increases that are in line with inflation, reducing the impact of the price spikes that have come with the recovery from the pandemic. At the same time, wage gains at that pace are outside the norm and could cause central bankers to worry that higher wages are a signal that inflation expectations are rising, creating a feedback loop that could cause price pressures to become entrenched.

Article content

Overall, the latest hiring numbers support the Bank of Canada’s story about how the recovery is unfolding. The central bank expressed confidence in the economy last week, characterizing both overall growth and the labour market as “robust.” The total number of jobs in the economy surpassed its pre-pandemic level in September, and the participation rate, which measures the number of people working and actively seeking employment, has risen to around 65.5 per cent, the same as at the start of 2020.

Still, the labour market is far from healed from the epic recession caused by the COVID-19 lockdowns in March 2020.

The jobless rate was hovering around a record low of 5.5 per cent when the crisis began, and employers still need to add another 170,000 jobs to get to where the pre-pandemic trend of hiring would have taken overall employment if not for the recession, according to Citigroup Global Markets Inc. economist Veronica Clark’s rough calculations. Statistics Canada’s “underutilization rate,” which measures the unemployed, the number of people who want a job but haven’t looked for one, and employees who are working less than half their usual hours, dropped to 13.1 per cent in October, elevated compared with 11.4 per cent in February 2020.

Article content

“A bit of a ho-hum report that will make little impact on the timing of any rate moves by the Bank of Canada,” said Douglas Porter, chief economist at Bank of Montreal. “But after the wildness of the prior 18 months, no one is complaining about ho-hum.”

• Email: [email protected] | Twitter: CarmichaelKevin

_____________________________________________________________

 If you like this story sign up for FP Economy Newsletter.

_____________________________________________________________

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts . Check out the latest episode below: