Canada sees a surge in hiring in January

Anna Shvets

Employment in Canada increased by 150,000 (+0.8 per cent) in January, and the unemployment rate held steady at 5.0 per cent, reported Statistics Canada on Friday.

Employment gains were driven primarily by people aged 25 to 54 (+100,000; +0.8 per cent), split evenly between women and men in this group. Employment also increased among people aged 55 and older (+43,000, +1.0 per cent), while it was little changed among youth aged 15 to 24, said the federal agency.

“The largest employment increases were in Ontario (+63,000; +0.8 per cent), Quebec (+47,000; +1.1 per cent) and Alberta (+21,000; +0.9 per cent). Employment declined in Newfoundland and Labrador (-2,300; -1.0 per cent),” it said.

“There were gains across several industries, led by wholesale and retail trade (+59,000; +2.0 per cent), health care and social assistance (+40,000; +1.5 per cent) and educational services (+18,000; +1.3 per cent). At the same time, employment declined in transportation and warehousing (-17,000; -1.7 per cent).

“The number of employees grew in both the private (+115,000; +0.9 per cent) and public (+32,000; +0.8 per cent) sectors. The number of self-employed workers was little changed.”

StatsCan said the total hours worked rose 0.8 per cent in January and were up 5.6 per cent on a year-over-year basis. Average hourly wages rose 4.5 per cent (+$1.42 to $33.01) on a year-over-year basis in January, down from 4.8 per cent (+$1.49) in December.

“Employment rose by 150,000 (+0.8 per cent) in January, mostly in full-time work (+121,000; +0.7 per cent). This continued an upward trend in total employment that began in September 2022, with cumulative gains totalling 326,000 (+1.7 per cent). The increase in January pushed the employment rate—the percentage of people aged 15 and older who are employed—to 62.5 per cent, a level last observed in April and May 2019,” said Statistics Canada.

The unemployment rate held steady at 5.0 epr cent in January, just shy of the record-low 4.9% observed in June and July 2022. The total number of unemployed people stood at 1.0 million, similar to the level observed since the summer of 2022, it added.

Andrew Grantham, an economist with CIBC Economics, said the surge in hiring is clearly a sign that the economy is stronger than expected and isn’t on the verge of a recession that, up until recently, had been the consensus view for the first half of the year.

“The good news from an inflation point of view is that the surge in hiring wasn’t driven by a further tightening in the labour market, but rather strong labour force growth which has been helping to fill previously open vacancies. We still forecast that the Bank of Canada will remain on pause in terms of interest rates for the remainder of this year,” he said.

Doug Porter, Chief Economist with BMO Economics, said the labour market is sending precisely zero signs of economic stress.

“For the Bank of Canada, the strong report must make them at least a tad nervous about their freshly-minted pause—we said the bar for any move would be very high, but the employment gain is pretty towering indeed. This is actually the last jobs report the Bank will see before it next decides in March, but their upcoming decisions will largely be determined by inflation, and the employment data may prove to be just loud noise, provided inflation continues to ebb,” he said.

James Orlando, Senior Economist with TD Economics, said it was a blowout report for the Canadian labour market.

“The 150k jobs gain is one thing, but the fact that gains were concentrated in full-time jobs in the private sector, alongside people working more hours, makes this an even more impressive report. Although the seasonal adjustment should be called into question, the sheer size of this print points to a further boost to consumer spending and overall GDP to start the year.,” he said.

“Today’s report is sure to raise eyebrows at the Bank of Canada. Their conditional pause on further rate hikes is predicated on a slowing of economic growth and an easing in the labour market. The Bank won’t adjust course after one report, but it will be closely watching to see if this trend of massive job gains continues.”

Carrie Freestone, Economist with RBC Economics, said the Bank of Canada Business Outlook Survey indicated business plans to hire staff have fallen alongside wage growth. This conflicts with the January Labour Force Survey data.

“Indeed, year-over-year wage growth has fallen to 4.5 per cent year-over-year, but hiring continues at a rapid pace and the unemployment rate held steady at a near record low 5.0 per cent. Any signs of labour market cooling require a deeper dive beyond headline numbers. Job postings are still up 50 per cent from pre-pandemic levels, but have come down in recent months. It remains our view that labour markets will not remain this tight over the near term,” said Freestone.

“The delayed impact of the Bank of Canada’s 425 basis points of hikes are still gradually flowing through to household and business debt payments and will ultimately erode demand, pushing unemployment higher through the end of the year. Moreover, with record high participation and fewer unemployed Canadians to fill jobs, job creation is not sustainable at the current pace. The Bank of Canada has indicated that rates will be held steady unless there is sufficient evidence that more restrictive monetary policy is needed. While the BoC will likely look past one strong jobs report, if additional reports prove to be stronger than expected, this would pose upside risk to the current terminal rate forecast of 4.50 per cent. ”

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)