jobless-feb

 

In continuing good news for newcomers to Canada and international students, Canada's economy added 37,300 jobs in January and the unemployment rate dropped slightly to 5.7 percent, according to Statistics Canada,

Some economists were predicting an increase of only 15,000 jobs for January and that the unemployment rate to edge up to 5.9 percent,

The January hirings occurred mainly in the public sector and in part-time work. The unemployment rate was the first drop in over a year,

In January, full-time jobs fell by 11,600, and part-time employment jumped by 48,900. Economists had expected a gain of 15,000 jobs in January and for the unemployment rate to edge up to 5.9 percent, according to Bloomberg.

 The unemployment rate, according to Statistics Canada,  had been rising during 2023, going from 5.1 percent in April to 5.8 percent in December.

What impact this will have on interest rates this year remains uncertain. 

Royce Mendes, the managing director and head of macro strategy for Desjardins, said that "the (January) employment data suggests that June is now more likely for the first Bank of Canada rate cut of this cycle than April,"

He also predicts that the Canadian economy could still be in for a "bumpy ride" in 2023 due to layoffs and the continuing effects of high-interest rates. 

 

Scotibank's Derek Holt said Canada’s job market remains resilient and is pointing toward a decent economic rebound.

"Slowing, eh? Moose droppings on that!" wrote Holt. "Canada just added another 37,000k jobs last month after the prior month was revised up to a small gain of 7,000."

Job gains in January occurred in several industries, including a hike of 31,000 jobs in wholesale and retail trade.

 The finance, insurance, real estate, rental and leasing sectors saw an increase of 28,000 jobs). Those job gains helped offset job losses in other sectors, including accommodations and food services, which were down 30,000 jobs. 

So what can newcomers and international students expect from Canada's economy in the months ahead?

Scotiabank's Rebekah Young, speaking at Prepare for Canada's Canadian Connections Summit for Newcomers said "Our best guess is that 2024 for Canada in economic terms is kind of a boring one moving sideways.'

"We're not expecting to see a big recession," said Young. "We're not expecting to see massive job layoffs, but we are expecting things to cool as interest rates sit at their very (current) high level today. Now, we do expect towards the end of the year that your inflation will be that much closer towards two percent."

CIBC economist Andrew Grantham said he expects fewer rate cuts by the end of 2024.

Grantham said the jobless data "suggest that the Bank won't be in a rush to cut interest rates, and we maintain our expectation for a first move in June."

"Given indications from (the January jobless) data and previously released GDP figures that the Canadian economy is in somewhat better shape than previously expected, we now forecast 25 basis point fewer cuts by the end of the year (finishing at 3.75 per cent rather than 3.50 per cent)."

Meanwhile, average hourly wages continued to rise at a slightly slower pace. They increased 5.3 percent year-over-year, compared to a 5.4 percent year-over-year increase in December.

"A decent job gain, a slide in the jobless rate, and persistent 5 percent wage growth are hardly the stuff of an urgent call for rate cuts," 

BMO chief economist Douglas Porter observed that  "the Bank of Canada is likely to view this report as further reason for a patient policy stance" regarding interest rate cuts. 

 

 

 

Cameron Moser of ACCES Employment reminds newcomers attending our Canadian Connections Summit that "there's so much more... in Canada than Toronto, Vancouver or Calgary... there's so many options available to you depending on the type of work that you do."

Rebekah Young of Scotiabank is live now at our Canadian Connections Summit, and here's what she's talking about: "It is worth ... diving into the role that newcomers and immigrants more generally play in the Canadian economy because, quite frankly, it's enormous that, you know, over a quarter of Canada's population now is foreign-born, about 30 percent of it is foreign-born. And so, really, much of the growth of our labour force over the past couple of years, even prior to the pandemic, has been from newcomers. And so a very big part of our growth is coming from newcomers that are filling important jobs and bringing important skills.

 

 

 

CIBC economist Andrew Grantham also expects fewer rate cuts by the end of the year.

"Today's data suggest that the Bank won't be in a rush to cut interest rates, and we maintain our expectation for a first move in June," he wrote.

"Given indications from today's data and previously released GDP figures that the Canadian economy is in somewhat better shape than previously expected, we now forecast 25 basis point fewer cuts by the end of the year (finishing at 3.75 per cent rather than 3.50 per cent)."

Job gains were across several industries, including wholesale and retail trade (an increase of 31,000 jobs), and finance, insurance, real estate, rental and leasing (an increase of 28,000 jobs). The gains offset other industries' decline, led by accommodations and food services (down 30,000 jobs.) Employment in the public sector increased by 48,000 jobs.

Average hourly wages continued to rise, albeit at a slightly slower pace, increasing 5.3 percent year-over-year, compared to a 5.4 percent year-over-year increase in December.

"A decent job gain, a slide in the jobless rate, and persistent 5% wage growth are hardly the stuff of an urgent call for rate cuts," BMO chief economist Douglas Porter wrote in a research note on Friday.

"The Bank of Canada is likely to view this report as further reason for a patient policy stance."

Derek Holt Canada’s job market remains resilient and is pointing toward a decent rebound in the economy

Slowing, eh? Moose droppings on that! Canada just added another 37k jobs last month after the prior month was revised up to a small gain of 7k following earlier seasonal adjustment revisions.

Rebekah Young of Scotiabank is live now at our Canadian Connections Summit, and here's what she's talking about: "It is worth ... diving into the role that newcomers and immigrants more generally play in the Canadian economy, because quite frankly, it's enormous that, you know, over a quarter of Canada's population now is foreign-born, about 30 percent of it is foreign-born. And so, really, much of the growth of our labour force over the past couple of years, even prior to the pandemic, has been from newcomers. And so a very big part of our growth is coming from newcomers that are filling important jobs and bringing important skills.

 

Here's Scotiabank's Rebekah Young live at our Canadian Connections Summit for #newcomerstocanada: "Our best guess is that 2024 for Canada in economic terms is kind of a boring one moving sideways. We're not expecting to see a big recession. We're not expecting to see massive job layoffs, but we are expecting things to cool as interest rates sit at their very (current) high level today. Now, we do expect towards the end of the year that your inflation will be that much closer towards two percent."

Cameron Moser of ACCES Employment reminds newcomers attending our Canadian Connections Summit that "there's so much more... in Canada than Toronto, Vancouver or Calgary... there's so many options available to you depending on the type of work that you do."

 

As the Canadian labour market softens, young people appear to be bearing the brunt of the slowdown – and it’s driving many of them out of the work force altogether, reports Matt Lundy of the Globe and Mail.

The labour participation rate for those aged 15 to 24 fell to 62.7 per cent in January, down a full three percentage points from last April, according to figures from Statistics Canada. People are considered labour participants when they are employed, or when they’re out of work, available and actively searching for a job.

The plunge has been especially large for young women: Their labour participation rate has ebbed to 62.5 per cent – the lowest level since 2000, not including the worst months of the pandemic – from roughly 67 per cent in early 2022.

By Matt Lundy

The Canadian economy started the year with a flurry of new jobs, but the underlying details were decidedly mixed, with hiring concentrated in the public sector and in part-time work.

Employment rose by 37,300 in January and the unemployment rate fell a tick to 5.7 per cent, the first decline in just over a year, Statistics Canada said Friday in a report. Financial analysts were expecting an increase of 15,000 jobs last month, after a tepid gain in December.

Despite the lower unemployment rate, the employment rate has also fallen for four consecutive months, because job growth isn’t close to offsetting a surge in population. Over the past year, employment has risen by 345,000, while the population aged 15-plus has jumped by one million.

In large part, the unemployment rate managed to fall in January because a smaller proportion of people were participating in the labour market.

While there were negative aspects to Friday’s report, analysts said the Bank of Canada is unlikely to lower interest rates before June, given rising employment and hot wage growth.

“The employment data suggests that June is now more likely for the first Bank of Canada rate cut of this cycle than April,” Royce Mendes, head of macro strategy at Desjardins Securities, said in a client note. “That said, recent announcements of layoffs at major companies across industries in Canada still suggest that the economy is set for a bumpy ride as the past effects on high interest rates continue to weigh on activity.”

The entirety of job creation in January was in the public sector and in part-time work, which rose by 47,600 and 48,900 positions, respectively. Despite those part-time roles, the number of hours worked across the economy increased 0.6 per cent during the month.

There was a strong divergence at the industry level. Employment rose by more than 31,000 in wholesale and retail trade, whereas it fell by roughly 30,000 in the hospitality industry. The finance, insurance and real estate industry enjoyed a robust month of hiring, with more than 28,000 new jobs. Educational services added another 27,700 roles.

Wages are continuing to grow quickly. The average hourly wage rose 5.3 per cent on a year-over-year basis, down slightly from a 5.4-per-cent pace in December. The Bank of Canada has repeatedly flagged elevated wage growth as a challenge in bringing inflation back to its 2-per-cent target.

Statscan noted in Friday’s report that female youth labour participation had fallen to its lowest level in more than 20 years. The agency said there has been a “strong downward trend” since last February, which has seen the participation rate ebb to 62.5 per cent from 66.7 per cent over that time.

Participation rates have also been falling for young men, though not to the same degree. Statscan defines youth as people aged 15 to 24.

The decline in labour participation is accompanied by a rise in unemployment, “indicating that labour market conditions for youth have become more difficult in the past year,” Statscan said.

Meanwhile, the 15-plus population grew by nearly 126,000 in January, the largest monthly increase in Labour Force Survey records that date back to 1976. However, employers aren’t creating jobs at nearly the same pace. As a result, the employment rate has eased to 61.6 per cent from a recent high of 62.4 per cent early last year.

The labour market has softened in recent months – highlighted by fewer job vacancies and a rising unemployment rate – as the economy adjusts to tighter lending conditions. The Bank of Canada’s benchmark interest rate sits at 5 per cent, the highest level since 2001.

The focus, however, has turned to when the central bank will start to lower interest rates, given marked progress in bringing inflation under control and a slowing economy. Many economists and investors had pencilled in the BoC’s April meeting as the potential start of rate cuts.

But a recent spate of strong economic data has forced them to revise their timelines. Interest-rate swaps, which capture market expectations about monetary policy, now point to the first BoC rate cut occurring in June or July.

On Friday, analysts at Desjardins and CIBC Capital Markets predicted one fewer quarter-point rate cut this year than they had previously.

Andrew Grantham, senior economist at CIBC, said in a research note that “today’s data confirm that the Bank won’t be in a rush to cut interest rates.”