Canada’s economy has seen a relentless stream of layoffs hitting corporations from the tech sector and beyond in recent months while many employers lament a shortage of employees, but neither appear to be weighing heavily on the country’s jobs numbers.
Statistics Canada’s latest labour force survey said Friday that January’s unemployment rate held regular at five per cent — just above the record low of 4.9 per cent reached in the summertime — because the country added a whopping 150,000 jobs.
Some 326,000 jobs have been added since September alone, bucking forecasts predicting the upper cost of borrowing would slow the economy down significantly this yr and create employment level upheaval.
What is occurring within the labour market immediately?
“The overriding story is we now have more exits from the labour market than entrances to the labour market due to population aging, due to demographics, since the boomers that were born after the Second World War, not only in Canada but anywhere… are aging out of the labour force,” said Armine Yalnizyan, an economist and the Atkinson Fellow on the Way forward for Employees.
“We had fertility rates drop, birthrates drop in the next generation, so when it comes to native born, there’s just not as many individuals to fill within the shoes of the those that are leaving.”
With the last baby boomers turning 65 in 2029 and folks now often working beyond the age of 65, Yalnizyan said this pattern will likely proceed for not less than the following decade.
At the identical time, the labour force has grown faster than the population, she said.
“At any point in our labour market history of collecting data, we now have never seen Canadians working this much,” she said.
“More of them working full-time, more of them are engaged within the labour market in a technique or one other, more of them are working longer hours and more of them are getting closer to what they trained for.”
How are temporary foreign employees contributing to this trend?
Temporary foreign employees saw a 13 per cent increase of their employment in the newest labour force survey.
“There isn’t any other group within the country that has seen this sort of growth and the jump in employment,” Yalnizyan said.
Because these people aren’t everlasting residents, she expects it to generate more churn within the labour market, which is able to keep wage growth lower.
Why are the January jobs numbers so significant?
The 150,000 recent jobs recorded in January was 10 times greater than expected and most of those jobs were full-time, said Sherry Cooper, chief economist at Dominion Lending Centres, in a note to investors.
The number is important, she said, since it places the employment rate at a pre-pandemic level.
“The Canadian jobs market is showing no signs of slowing,” Cooper said.
“This has to make the Bank of Canada not less than a bit nervous.”
With the U.S. jobs market data in January also “robust” and Jerome Powell, chairman of the U.S. Federal Reserve, indicating rates of interest are prone to rise further, hinting the Bank of Canada can have to mirror the U.S. if inflation doesn’t drop.
We’re hearing these days about lots of layoffs, especially in tech. Is that impacting job numbers?
In recent months corporations as big as Shopify Inc., Cover Growth Corp. and Postmedia Network Corp. have conducted layoffs, but Yalnizyan doesn’t see it having much of an effect on the labour market.
It’s possible these cuts have little effect because they’re impacting employees with skills which might be in demand and there are many other employers able to scoop them.
Even amid the cuts, Carrie Freestone, an economist with the Royal Bank of Canada, said job postings are still up 50 per cent from pre-pandemic levels, but have come down in recent months.
“It stays our view that labour markets is not going to remain this tight over the near term,” she said, in a note to investors.
Meanwhile, actual, or non-seasonally adjusted, employment fell by 125,000 in January.
Before the pandemic, that figure would sit at 250,000 to 300,000 in a “normal” January, said Douglas Porter, BMO Capital Markets chief economist, in a note to investors.
“So, evidently, there simply were far, far fewer layoffs than in a traditional yr at first of 2023,” he said.
“As a substitute of an actual hiring boom, what we as an alternative saw last month was a layoff freeze, given how hard it’s to seek out employees in the present environment.”
Where are job gains coming from?
“The massive sectors which might be continuing to grow are retail and hospitality because they’re playing catch up and health care because we want it,” said Yalnizyan.
Wholesale and retail trade experienced the biggest gains to employment, adding 59,000 jobs, followed by 40,000 jobs added in health care and social assistance.
Most jobs added to the economy were full-time, while people aged 25 to 54 drove the gains.
— With files from Nojoud Al Mallees in Ottawa