Canada added 50,000 jobs in November, double the expected number, but the overall picture does not look rosy.
The unemployment rate increased by 0.3 percentage points to 6.8 per cent — the highest since January 2017 — as more people looked for work. A slow job market finally hit wages, as wage growth dropped sharply to 3.9 per cent after hovering around five per cent for over a year.
The size of next week’s Bank of Canada rate cut remains a toss-up, but a 25 basis-point cut remains the more likely scenario. While inflation fell to two per cent and unemployment rose, the central bank has to balance the domestic economy with a weak loonie and the widening differential with the U.S. Federal Reserve — whose interest rate stands a full percentage point higher at 4.75 per cent.
The takeaway: Canada’s job market will warm up by early 2025 as more rate cuts are expected and the cost of borrowing declines.
Employers were still hesitant to hire as the current real interest rate remains restrictive. Most of the jobs gained came from the public sector (45,000) as opposed to the mere 6,000 jobs gained in the private sector.
At the same time, nearly half of unemployed people in November (46.3 per cent) were new entrants or had not worked in the past year. This is another indicator of laggard hiring by firms rather than of mass layoffs.
The proportion of those who lost or left their jobs recently both declined, further indicative of an ongoing trend where employees stay put in their positions as opportunities to move jobs remained scarce.
Youth unemployment rose 1.1 percentage points to 13.9 per cent in November, partially offsetting September’s and October’s rate declines as more young people entered the workforce than there were job openings.
On an annual basis, the unemployment rate rose among both women (5.8 per cent) and men (5.7 per cent) in the core-age range of 25 to 54.
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The main sectors that added jobs include:
- Wholesale and retail trade (39,000).
- Construction (18,000).
- Professional, scientific and technical services (17,000).
- Educational services (15,000).
- Accommodation and food services (15,000).
Conversely, sectors that lost jobs include:
- Manufacturing (29,000).
- Transportation and warehousing (19,000).
- Natural resources (6,300).
With the emergence of new technology, it’s crucial for workers to continually reskill and upskill. Over the past year, 29.2 per cent of core-aged Canadians completed training outside the regular education system—73.9 per cent of whom completed job-specific training. Still, the proportion who took computer-related training remained at a low 8.8 per cent.
As Canada’s labour productivity fell for a third consecutive quarter and is currently below pre-pandemic levels, it is more important than ever for employers and workers to invest in technology training and other productivity-enhancing measures.