We can breathe a sigh of relief. The jobs numbers might be backward looking, but through the end of 2022, the Canadian labour market remained rock solid. Employment soared in December, as the unemployment rate fell to 5.0%, and more people participated in the labour force. Youth had an especially strong showing in the month after a weak second half of the year. While some of December’s upside surprise probably reflects volatility in the age 15 to 24 cohort, in general it underscores that broader conditions have held up quite well amid economic uncertainty.
While jobs swung upward, wage growth cooled somewhat. Hourly earnings were still a strong 5.1% above where they were a year earlier, but that pace was down from the 5.6% rate in November. Moreover, there was deceleration in pay increases across most industries, suggesting the dip wasn’t just driven by the types of jobs added in the month.
Wage growth currently stands at the cross-hairs of opposing trends, with tight labour market conditions and elevated inflation putting pressure on employers to raise pay in the face of an uncertain economic outlook. So far though, the clouds on the horizon haven’t rained on the labour market’s parade.