Posthaste: Plummeting job vacancies another sign Canada’s economy is under the gun

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Job vacancies shrank to pre-pandemic levels as the ongoing decline in openings paints a picture of a labour market that is tightening and an economy that is weakening, new data from Statistics Canada suggests.

Job vacancies, which measure the number of open positions among Canadian employers, fell to 575,400, a 28 per cent drop from April 2023. At the start of 2020, vacancies stood at 582,510. It was also the third consecutive decline in 2024, the agency said in a release on Thursday.

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“Canada’s payroll survey of employment showed that labour market slack continued to open up in April, as … job vacancies dropped off by 32,000,” CIBC World Markets economist Katherine Judge said in a note.

The drop in vacancies also means the number of unemployed people per job rose to 2.3 in April from 2.2 in March.

“The decline in vacancies suggests that businesses are slowing the pace of hiring, likely because of the slow economy,” Charles St-Arnaud, chief economist at Alberta Central, said in an email.

Vacancies were a major point of concern as they soared to more than a million in May 2022 as the economy opened up from the pandemic. Employers found themselves unable to fill positions and were forced to hike pay as they fought to find and keep employees.

While the struggle to fill positions may be easing, the pressures of pay increases persist.

Payroll data released alongside the vacancy numbers showed that average weekly earnings rose 3.7 per cent in April from last year.

Whether employers are truly back in the driver’s seat remains to be seen.

St-Arnaud said more proof of whether that is the case will be available in the upcoming Bank of Canada Business Outlook Survey (BOS), which asks employers about their hiring intentions.

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In the previous BOS, fewer businesses said they were experiencing labour shortages, which was attributed to weaker demand for and a growing supply of available workers.

Economists have been closely watching labour data for signs that the economy is fraying as Canadians pull back on spending to deal with higher interest and inflation rates that are squeezing their pocketbooks.

The most recent labour force survey (LFS) by Statistics Canada, released on June 7, said the economy added 26,700 positions in May, for a net gain during the year of a bit more than 190,000 jobs. However, the unemployment rate has steadily risen this year to 6.2 per cent, from 5.7 per cent in January, as job creation fails to keep pace with the country’s soaring population.

The labour force survey and the vacancy data are distinct because the latter does not include the agriculture sector, private employment or many self-employed positions.

Still, the drop in vacancies could start to play out in the broader market.

“It suggests we could start seeing weaker LFS employment gains in the coming months,” St-Arnaud said.

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Canada experienced record demographic growth last year as new arrivals to the country ramped up and expanded the population by 1.3 million people, the fastest annual pace since 1957.

Now, National Bank of Canada is predicting a “demographic hangover” after Justin Trudeau’s Liberal government announced it was cutting back on the number of foreign temporary residents allowed into the country.

“Recognizing that the situation was becoming increasingly perilous, the federal government recently decided that it was time to take a pause to allow the economy to digest the unprecedented population growth binge of the past two years,” Stéfane Marion, chief economist at National Bank, said in an analysis.

He estimates population growth will significantly slow to 0.7 per cent during the 2025-2027 period from a projected 3.1 per cent increase in 2024, allowing the country to catch up in areas such as infrastructure and housing. However, he predicts regional differences and is calling for population growth in Alberta and Saskatchewan of 1.5 and 1.6 per cent, respectively, from 2025 to 2027.

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The national forecast, while much lower than the past two years, still beats the average of 0.4 per cent population growth for members of the Organization for Economic Co-operation and Development, Marion said.

• Today’s Data: Statistics Canada releases gross domestic product for April; U.S. personal income and spending 
  

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Today’s Posthaste was written by Gigi Suhanic, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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