Canada’s economic and employment landscape is undergoing a major transformation, with three in every private sector industries growing. This trend, usually seen only during times of economic recession, is cause for concern over the state of America’s newly arrived and future labor force. The November Labour Force Survey comes out this Friday, December 8th. It will be key in deciding whether these gains mark actual progress or if they’re merely flukes in the data.
In a dramatic reversal from recent months, Canada’s labour market experienced a net loss of 58,000 jobs in September. Upward revisions in the Labour Force Survey ushered in one of the best beatings on record. In the past two months combined, there was a net loss of 26,000 jobs. The drastic rise and fall has raised concern and doubt. This unease is compounded by recent results from the Survey of Employment, Earnings, and Hours, which are based on data collected directly from employers.
The importance of the upcoming Labour Force Survey will be huge, noted National Bank of Canada economists Matthieu Arseneau and Alexandra Ducharme.
“The November data from the Labour Force Survey (LFS, conducted among households) will be published this Friday. These figures are eagerly awaited, as they will reveal whether the upturn of the last two months is confirmed or whether it was a statistical fluke. This momentum indeed contrasts with soft data showing a weak appetite for hiring.” – National Bank of Canada economists Matthieu Arseneau and Alexandra Ducharme
While job numbers are volatile, one thing is certain – private sector wages in Canada are skyrocketing. In fact, they’ve increased an astonishing annualized 5.5% over the past half year. Skyrocketing wage growth creates a more difficult set of conditions to manage for the Bank of Canada. It limits their room to cut policy rates, the necessary measures to jumpstart economic activity. Today’s rapid increase in wages is considered unsustainable with the objective of getting inflation back down to target.
Among these is the encouraging reality that significant net employment growth frequently takes place within recessions. Despite 41% of private sector industries indicating increasing employment, analysts are still wary. Further, they warn that all this growth needs to be considered in light of incoming labour data to see if it is sustainable.
As anticipation builds for the November Labour Force Survey, economists and policymakers alike are looking to these figures to gauge the true state of Canada’s labour market. The results will either reinforce optimism about job creation or highlight persistent challenges ahead.