Unemployment rate drops as wage growth weakens

OTTAWA — Canada’s unemployment rate has edged back down to its fourdecade low of 5.8 per cent — but even in a job market that’s having a hard time finding workers, wage growth is continuing to slow.

The country added 11,200 net new jobs in October, including a gain of 33,900 full-time positions, Statistics Canada said Friday in its latest labour force survey.

The agency said the jobless rate moved down from its 5.9 per cent reading in September, in large part because fewer people searched for work.

The drop in the unemployment rate was deeper in Kelowna, where the October rate was 5.0 per cent compared to 5.7 per cent the month before.

B.C.’s jobless rate stood at 4.1 per cent in October, down 0.1 per cent from September and the lowest rate in the country.

One fresh data point, in particular, is likely to catch the Bank of Canada’s attention: wage growth.

The indicator is watched by the central bank ahead of its interest-rate decisions and, despite the tightened labour market, pay growth slowed for its fifth-straight month. Solid wage growth can apply upward pressure on inflation, which can then feed into the Bank of Canada’s decisions on interest rates.

Year over year, average hourly wage growth slowed last month to 2.19 per cent for its weakest reading since September 2017. Experts have predicted wage growth to rise along with the tightened labour market, but average hourly wage growth has dropped every month since May, when it was 3.94 per cent.

When it comes to permanent employees, wage growth last month rang in at just 1.9 per cent — which TD senior economist Brian DePratto noted is below inflation.

“The wage rate definitely stands out here,” said DePratto, who believes the number will make it a little bit less likely the Bank of Canada will introduce another interest rate hike in December.

DePratto expects the central bank to wait until January before its next rate increase.

“It’s concerning, for sure, and it’s difficult to disentangle, but we’re not going to get too, too hung up just yet,” he said.