February Labour Force Survey: Bucking Other Economic Data, Job Growth Keeps Chugging
The Labour Force Survey (LFS) continued to defy other disappointing economic data in February, posting another solid month of job growth. Job growth is now estimated to have exceeded 50,000 in three of the past four months. Canadian youth have fared particularly well since the start of the year—their employment rate jump over the past two months has fully reversed a decline seen over the course of 2018.
Recent LFS job growth hasn’t just out-kicked weak GDP data, but also some of Canada’s other employment indicators. The Survey of Employment, Payrolls and Hours (SEPH)—which posted faster job growth than the LFS in early 2018—has softened a bit as of late and actually fell in December, its first meaningful monthly decline since 2017. Initial employment insurance (EI) claims also ended the year on a weak note, rising on a year-over-year basis in December, particularly in Alberta.
Given these conflicting signals, it’s tough to assess the true momentum of the Canadian labour market. The overall employment situation seems to have remained in good shape even as other economic indicators have stalled. Still, we’ll need to see the early 2019 SEPH and EI claims data to have more confidence in this assessment. It will likely be tough to achieve some of the outcomes we’re hoping for from a tighter labour market—in particular, strong and sustained wage growth—if other economic trends like in business investment and productivity growth remain subdued.