INSIGHTS
Canada's job gains came in hotter than expected as wage growth spiked
REAL ECONOMY BLOG | March 10, 2023
Authored by RSM Canada
February’s jobs data in Canada showed a still-strong labor market that did not offer any relief in terms of keeping inflation under control.
The net change in total employment dropped to 21,800 from a whopping 150,000 increase in January yet remained above the expectations of only 10,000.
At the same time, the unemployment rate and labor force participation rate stayed unchanged at 5.0% and 65.7%, respectively, according to data released Friday by Statistics Canada.
The more concerning data point was wage growth for permanent employees, which surged to 5.4% from 4.5% previously.
Hourly wage growth, though, is always subject to compositional effect, and this case was not an exception.
Job gains were driven mostly by the goods sector, which has higher average wages and posted a net gain of 17,500 jobs in February compared with an increase of 25,400 in January.
At the same time, the services sector, which includes lower-wage industries like leisure and hospitality, recorded a sharp drop in net gains, posting only a net increase of 4,200 jobs versus 124,700 in January.
The data came out amid a recent pause in rate hikes by the Bank of Canada. That pause will be put to a test, especially with inflation hard to predict.
We do not expect the Bank of Canada to surprise the market anytime soon, yet there are always risks that another strong Consumer Price Index report, which comes out next week, might prompt the central bank to do more.
Let's Talk!
Call us at (519) 426-5160 (Simcoe) or (519) 842-4246 (Tillsonburg) or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Tuan Nguyen and originally appeared on 2023-03-10 RSM Canada, and is available online at https://realeconomy.rsmus.com/canadas-job-gains-came-in-hotter-than-expected-as-wage-growth-spiked/.
RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.
Good Redden Klosler a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.
For more information on how Good Redden Klosler can assist you, please call us at (519) 426-5160 (Simcoe) or (519) 842-4246 (Tillsonburg).