Canada adds nearly 25k jobs in November: instant reaction
The Canadian economy added nearly 25,000 new jobs in November, but the gains were offset by Canada’s rapid population growth during the same period, economists say.
“In this modern era, it's worth keeping in mind with all the immigration happening, 25,000 new jobs isn't that many,” Eric Lascelles, chief economist at RBC Global Asset Management, told BNN Bloomberg in a Friday television interview.
“You need 40,000-plus (jobs) just to keep pace with the number of people coming into the country.”
Statistics Canada released its November labour force survey Friday morning, which found that despite the job growth, most of which was full-time, the country’s unemployment rate ticked up to 5.8 per cent last month from 5.7 per cent in October.
Brendon Bernard, a senior economist with Indeed.com, agrees that “25,000 isn’t what it used to be.” He told BNN Bloomberg in a Friday interview that the labour market is “lagging” when population growth is taken into account.
“Overall, I think this is consistent with the past six months of data showing the job market continues to eke out gains, but things definitely have softened a bit,” Bernard said.
Lascelles said the industries that have been most affected by the softening labour market so far are finance, insurance and real estate, all of which are sectors particularly sensitive to higher interest rates.
“Four per cent of the workforce has been lost in those collective sectors since July, so there have been big sustained losses there, and by all accounts, some additional losses to come based on recent earnings announcements,” he said.
Over the past few months, Canadian banks and financial institutions such as Desjardins, Bank of Nova Scotia and Royal Bank of Canada all announced layoffs, with TD Bank reporting on Thursday it plans to let go of more than 3,000 employees.
Canada’s labour market had been experiencing a strong bounce back from the pandemic, but the unemployment rate has been on an upward trend since April as the Canadian economy shows clearer signs of weakness.
Many consumers are struggling amid Canada’s slowing economy as decades-high interest rates and inflation continue to eat into their purchasing power, however wage growth grew by almost five per cent in November, Statistics Canada found.
Lascelles said that number will be a “point of complication” for the Bank of Canada when it makes its next interest decision on Dec. 6, as the central bank could see it as inflationary.
“Five per cent wage growth at a time of roughly three per cent inflation is a little bit hot, and of course, some of this is catching up from real wages falling before,” he said.
“(Or) some of this might just be coming out of profit margins, which isn't great for investors, but it means it doesn't have to be inflationary, and so I don't think it's quite a slam dunk that inflation is going to be a problem because of this.”
Bernard said he wasn’t surprised that wage growth remained elevated in November, noting that Canadian wages tend to “react to the cycle with a substantial lag,” and wages have been catching up with previous high inflation levels.
But as it stands, wage growth is still outpacing Canada’s “lukewarm” economy at an unsustainable rate, Bernard explained.
“Something's got to give; is it that wages are going to come down, or do wages show up in higher prices, or do companies with less revenue potentially have to lay off some people?”
With files from The Canadian Press