State of the labour Market

October Labour Force Preview: Still Gas in the Tank?

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Further progress in Ontario alone could keep job growth chugging.

How long can Canada’s streak of job growth last? With the working-age (15-64) employment rate hitting a new high in September, shouldn’t conditions be ready to at least plateau? Maintaining the current pace might be a bit much to ask, and the evolving economic environment at home and abroad will remain of primary importance. But when it comes to domestic capacity, there’s still a prospect for further gains, starting with Canada’s most populous province.

Ontario has accounted for about half of Canadian employment growth in recent years, an outsized contribution relative to its 39% share of the adult population. However, this primarily reflects its relatively fast pace of working-age population growth. Since the end of 2014, the number of people age 15 to 64 in Ontario has grown 5.4%, compared to just 1.7% in the rest of the country.

After accounting for its faster population growth, Ontario’s labour market progress has been less impressive. In December 2014, 71.6% of the working-age population in Ontario was employed, matching the share of Quebec and B.C. together. Since then, the working-age employment rate is up two percentage points in Ontario, a gradual improvement, with rates now just 0.3 percentage points below their peak in the mid-2000s. Meanwhile, the rate is up a whopping 4.8 percentage points in Quebec and B.C., 3.5 points above its pre-recession high.

Prior employment-rate peaks are useful yardsticks to gauge the health of the job market, but Quebec and B.C.’s progress, as well as recent experience in the U.K., highlight they aren’t hard caps on future growth. This is partly due to potential room for gains among groups with traditionally lower employment rates. For instance, as conditions improved in Canada’s second and third most populous provinces between 2014 and 2018, these regions saw the employment rates among prime-age (25-54) Indigenous peoples, as well as recent immigrants, surge eight and nine percentage points, respectively.

Is the engine on?

Can Canada maintain strong employment growth when other measures of economic activity like GDP growth remain subdued? This question, amid ongoing uncertainty in the global economy, has dogged the Canadian labour market over the past year. 

Provided conditions at home and abroad don’t fall off the rails, these contrasting trends could continue, at least to some degree. Productivity and GDP growth might stay lackluster, but the potential for working-age employment rates in Ontario to start catching up to Quebec and B.C. suggests job growth might still have room to run. In this Friday’s Labour Force Survey numbers, I’ll be tracking closely the durability of recent job market momentum in Canada’s largest province.  

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