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Strong Employment Gains Mask More Weakness in Wages

Dec 07, 2018

The Conference Board of Canada’s Economist Cory Renner offers the following insights on the Labour Force Survey data for November.

Quote

The results from the recent Labour Force Survey were mixed. While employment gains were impressive for a third straight month, wage growth was again disappointing. Despite the very low unemployment rate, we have failed to see a pickup in wage growth. Weak wage growth adds to the already substantial financial pressures Canadians are facing from declines in stock markets and house prices, as well as interest rate increases.
—Cory Renner, Economist, The Conference Board of Canada.

Insights

  • Employment rose 94,100 in November. Gains were led by full-time jobs (+89,900), with part-time jobs up slightly (+4,100).
  • The labour force rose by 77,200 for the month, as participation rates increased to 61.7 per cent, the highest it has been since March 2018.
  • With jobs expanding faster than the labour force, the unemployment rate fell to 5.6 per cent, its lowest rate on record.
  • Employment gains were widespread. Quebec saw the largest job gain (+25,800), while Newfoundland and Labrador saw the weakest (-1,300). Employment in Ontario was up (+20,200).
  • Employment in the maritime provinces was modest. New Brunswick had the strongest performance with 1,700 jobs gained. Meanwhile, Nova Scotia’s employment was relatively stable at 200 new jobs, while P.E.I. saw a small decline of 200 positions.
  • The Western provinces saw strong employment gains, led by Alberta (+23,700) and British Columbia (+15,900). Saskatchewan was up 5,500 jobs and Manitoba (+2,600).
  • Overall, the story around employment was very positive with November’s data release. Employment has risen by 168,600 in the last three months, following a weak performance through the earlier part of the year. It’s also positive that the gains were led by full-time jobs for a second straight month.
  • However, wage growth disappointed again, falling to 1.7 per cent year over year in November. This is the weakest year-over-year performance since last July and is surprising given the very low level of unemployment.
  • Wage growth had begun to pick up in first half of the year, but its poor performance since then has become a cause for concern. This is magnified when you also consider the impact from falling stock prices, weak house price growth, and rising interest rates.
  • By province, wage growth improved significantly in Quebec (up 1.7 per cent in November versus +0.6 per cent in October). Saskatchewan also saw a strong pickup in wages (+1.8 in November versus +0.6 in October). However, Ontario weakened significantly (+2.2 per cent in November versus 3.5 per cent in October), at the same time British Columbia saw a strong deterioration (-1.2 per cent in November versus +2.2 per cent in October). In May, British Columbia’s year-over-year wage growth reached as high as 6.8 per cent and has been declining recently.
  • Wage growth weakened more in services than in goods producing industries with year-over-year growth of 2 per cent in goods now outpacing year-over-year wage growth of 1.6 per cent for services. Industries with the fastest year-over-year growth are wholesale and retail trade (+2.5 per cent), manufacturing (+3.4 per cent) and agriculture (+3.7 per cent).