‘Gangbusters’ data bump jobless rate to 40-year low, wage growth slows again
A blast of new jobs last month knocked the country’s unemployment rate down to its lowest level since Statistics Canada started measuring comparable data more than 40 years ago -but despite eye-catching progress, Friday’s numbers also delivered disappointment.
Canada added 94,100 net jobs for its largest monthly increase since March 2012 when there was a gain of 94,000 jobs, Statistics Canada said in its the labour force survey. The November surge was fuelled by other positives: 89,900 new full-time positions and 78,600 employee jobs in the private sector.
The jobless rate fell to 5.6 per cent last month from October’s reading of 5.8 per cent, which had been the previous low mark since comparable data first became available in 1976. The old statistical approach - prior to 1976 registered an unemployment rate reading of 5.4 per cent in 1974. The improvements, however, obscured a key piece of data: weakening wage growth.
Year-over-year average hourly wage growth for permanent employees continued its decline in November to 1.46 per cent - its lowest reading since July 2017.
“There’s no question that the headline job growth is gangbusters strong,” said Frances Donald, head of macroeconomic strategy at Manulife Asset Management “I would caution us against celebrating too quickly, however, because wage growth is decelerating sharply.” Experts have been expecting wage growth to pick up its pace, thanks to the tightened labour market. But the opposite has been happening - wage growth has dropped every month since its May peak of 3.9 per cent and now sits well below inflation. The Bank of Canada keeps a close watch on wages ahead of its interest-rate decisions.
The central bank has raised the rate five times since the summer of 2017 in response to Canada’s strong economic performance. Governor Stephen Poloz has signalled that more increases will be needed to keep inflation from rising too high.