TORONTO – Canada’s economy has seen a steady stream of layoffs in recent months, hitting companies in the tech sector and beyond, while many employers complain of labor shortages, but neither appear to be weighing heavily on the country’s employment numbers.
Statistics Canada’s latest labor force survey said on Friday that the unemployment rate held steady at five percent in January — just above a record low of 4.9 percent hit in the summer — as the country added a whopping 150,000 jobs.
Around 326,000 jobs have been added since September alone, bucking forecasts that the higher cost of borrowing would slow the economy significantly this year and lead to a shift in employment levels.
A sign outside a Statistics Canada building is seen in Ottawa on Friday, March 12, 2021. THE CANADIAN PRESS/Justin Tang
What is going on in the labor market right now?
“The prevailing story is that we have more exits than entries because the population is aging, because of demographics, because the boomers who were born after World War II, not just in Canada but everywhere… are aging of the workforce,” said Armine Yalnizyan, economist and Atkinson Fellow on the Future of Workers.
“We’ve had a drop in fertility rates, birth rates in the subsequent generation, so in terms of the native-born, there just aren’t that many people following in the footsteps of the people leaving.”
With the last baby boomers turning 65 in 2029 and people today often working past age 65, this pattern is likely to continue for at least the next decade, Yalnizyan said.
At the same time, the labor force has grown faster than the population, she said.
“At no point in our history of collecting labor market data have we seen Canadians work as much,” she said.
“More of them are working full-time, more of them are in the labor market in one way or another, more of them are working longer hours and more of them are getting closer to what they’ve learned.”
How do foreign temporary workers contribute to this development?
Foreign temporary workers recorded a 13 percent increase in employment in the most recent labor force survey.
“There is no other group in the country that has seen such growth and employment growth,” Yalnizyan said.
Since these people are not permanent residents, they expect that this will lead to more outflow in the labor market, which will keep wage growth lower.
Why are the January jobs numbers so significant?
The 150,000 new jobs recorded in January were ten times more than expected, and most of those jobs were full-time, Sherry Cooper, chief economist at Dominion Lending Centers, said in a note to investors.
The number is significant, she said, because it brings the employment rate to pre-pandemic levels.
“The Canadian job market is showing no signs of slowing down,” Cooper said.
“That must make the Bank of Canada at least a little nervous.”
With US jobs data also “robust” in January and Federal Reserve Chair Jerome Powell suggesting interest rates are likely to keep rising, it suggests the Bank of Canada may need to mirror the US if the inflation is not falling.
We’ve been hearing about a lot of layoffs lately, especially in the tech space. Does this affect the number of jobs?
In recent months, companies as large as Shopify Inc., Canopy Growth Corp. and Postmedia Network Corp. Layoffs were made, but Yalnizyan does not see a major impact on the labor market.
It is possible that these cuts will have little effect because they affect workers with in-demand skills and there are many other employers willing to take them on.
Even amid the cuts, Carrie Freestone, an economist at the Royal Bank of Canada, said job vacancies are still 50 percent above pre-pandemic levels but have declined in recent months.
“We remain of the view that labor markets will not remain as tight in the short term,” she said in a note to investors.
Meanwhile, actual or non-seasonally adjusted employment fell by 125k in January.
Before the pandemic, that number would be somewhere between 250,000 and 300,000 in a “normal” January, Douglas Porter, chief economist at BMO Capital Markets, said in a note to investors.
“Obviously in early 2023 there were just a lot, a lot fewer layoffs than there would be in a normal year,” he said.
“Instead of an actual hiring boom, we saw a freeze on layoffs last month due to the difficulty of finding workers in the current environment.”
Where do job gains come from?
“The big sectors that continue to grow are retail and hospitality because they’re catching up, and healthcare because we need it,” Yalnizyan said.
Wholesale and retail trade saw the largest job gains with 59,000 new jobs, followed by 40,000 new jobs in healthcare and social welfare.
Most of the jobs added to the economy were full-time, while people aged 25 to 54 boosted profits.
— With files from Nojoud Al Mallees in Ottawa
This report from The Canadian Press was first published on February 14, 2023.
Companies in this story: (TSX:WEED, TSX:SHOP)
Source: www.winnipegfreepress.com
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