The job market keeps chugging, even a year into the Bank of Canada’s tightening cycle we’d expect to start putting the break on growth. Employment rose at a solid rate in April, keeping up with elevated population growth. Part-time jobs led the way, but hours worked slightly outpaced job gains, a sign that conditions remained strong. The Canadian unemployment rate has now held at 5.0% for five straight months. Given where we are in the economic cycle, no news is good news on this front.
More notable in today’s numbers was that wage growth stayed hot, with hourly-earnings growth remaining above 5% for a third straight month. The year-over-year pace ticked down slightly, but that partially reflected base-year effects boosting growth in March. Overall, pay gains continue their solid pace, despite employer hiring appetite receding from voracious levels. Instead, tight conditions on the job seeker side, namely the near multi-decade-low unemployment rate, is looming larger.
Current wage dynamics remain a tug of war of concerns. On one side is the prospect for Canadian paychecks to start clawing back their losses in purchasing power from the recent bout of inflation, while on the other is whether these trends will impede inflation from easing further. The dynamic has proceeded relatively smoothly so far in 2023, as inflation has eased amid solid wage growth, but this process is one that will play out over several quarters, not just a few months.
