For Canada, 2018 brings an 'unbelievable', 'ridiculously strong' job market - Macleans.ca
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For Canada, 2018 brings an ‘unbelievable’, ‘ridiculously strong’ job market

As Canada’s unemployment rate reaches historic lows, will wage growth finally reawaken inflation?


 

A higher minimum wage at fast food and other businesses could be what finally stokes wage-driven inflation in Canada this year.

Economists were left grasping for superlatives to describe the country’s latest jobs report out today. TD called it “unbelievable,” Scotiabank went with “ridiculously strong,” while BMO described it as a “blowout report.” So why are economists so excited? Just about everything is going right. Still, it makes you wonder if the jobs market is hot, where is the wage inflation

The country added 78,600 jobs in December, according to Statistics Canada, an impressive number given that a whopping 79,500 positions were created in November. In the past year, the Canadian economy created 422,000 jobs, an increase of 2.3 per cent. That’s the strongest percentage gain in 14 years, according to BMO. Capital Economics notes the details of the report are not quite as impressive as the headline number—54,900 of the positions added in December were part-time, for example—but even the reliably bearish economics shop characterized the latest numbers as positive. What’s more, the job gains were seen across Canada, with Alberta and Quebec showing the strongest growth, and in a wide swath of industries.

The gains were strong enough to send the unemployment rate down to 5.7 per cent, the lowest level since 1974. Unemployment fell even as the participation rate, a measure of the number of Canadians employed or actively looking for work, ticked up slightly to 65.8 per cent.

Not only did the unemployment rate fall, but Canadians are working more hours. Growth in the average number of hours worked dipped earlier in the year, but grew three per cent on a year-over-year basis. Scotiabank notes that’s the fastest pace since September 2003. That’s important, since an uptick in hours worked points to stronger wage growth down the road.

And, indeed, average hourly wage growth is accelerating. In December, wages increased by 2.7 per cent on a year-over-year basis. At the start of 2017, the country’s tepid wage growth was a concern for economists and the Bank of Canada. That worry has largely dissipated for now and a number of increases to provincial minimum wage rates will only further drive wage growth. Hourly wage growth, combined with an increase in hours worked, bodes well for incomes in the year ahead, too, even if it ultimately adds to inflationary pressures. Scotiabank, for one, changed its interest rate forecast and is now calling for the central bank to hike rates later this month.

More rate hikes could finally crack the housing market and squeeze debt-heavy mortgage holders, but Derek Holt, an economist with Scotiabank, offers a sanguine perspective. Holt wrote in a report that stronger incomes will also dampen the risk higher interest rates pose to heavily indebted Canadians. While households may have to devote a bigger chunk of their paycheques toward servicing debt when rates tick up, the data released today suggest that higher incomes could help ease the burden in the year ahead.

Canadian Inflation: Still muted

MORE ABOUT INFLATION:


 

For Canada, 2018 brings an ‘unbelievable’, ‘ridiculously strong’ job market

  1. And supposedly ‘Dimples’ is going to win the election by yapping about the Aga Khan??

  2. When I was a junior high teacher I would have used these graphs as examples misleading/deceptive statistics. The unemployment rate graph is especially bad. Anyone of those students would have been able to call you out on that one. Shame on you Macleans.

    • What do you mean by “misleading/deceptive statistics”? Are you an expert now on “real stats and grafts ” that are not misleading or deceptive?
      How would you present the same info using “your tools”?
      Please let us know so we could get educated on “your new statistical information tools” instead of shaming Macleans?

      • if you don’t understand statistics don’t show the whole world …. learn how to interpret graphs instead and we’ll all be better off

  3. Nik Nanos showed a pie chart of what the most important things to Canadians will be in the new year, if i can recall the most important thing to Canadians was the ‘ECONOMY'(5.7 %) by 48%, and the rest of the chart was just noise, if i can recall. While the grits look after the ‘ECONOMY'(5.7 %), the cons will continue to look under rocks to try and bring the Trudeau, or the grits down. I hope Andrew will start to brandish his skills in Town Hall meetings with Canadians over the next few years, and how he is going to do things better than Trudeau with the ‘ECONOMY'(5.7 %) live in front of real Canadians. If you can’t face the lions den(town halls) in 2019, than your just another ‘Milquetoast’ like your predecessor Steve Harper, hiding in closets.

    • The U.S. economy grew at twice the rate ours did in the last two quarters. So Scheer has an easy job which is consistent with his party’s long term policies and Trump’s direction.
      -lower taxes
      -quit wasting money
      And as a side benefit, the TSX will match the growth in The Dow which has been 4 times the TSX rate and all equity investors will have much more money to plow back into the economy.

      • So what are you a Canadian or American?
        How come you commenting negatively on a very good news and you were very silent when under Harper our economy grew two times slower then U.S. economy and TSX growth was not even close to the DOW growt?
        You sound to me like an opposition Party member criticizing Party in power but when “your” party is in power making the same stupid decisions you are very silent!!
        You cant have both ways.

        • I was a very proud Canadian until Trudeau#2 took over and decided to spend his way to happiness. His father, who was a lot brighter than the boy, left up with his legacy of massive debt and 19% mortgages. The boy could do even worse if he doesn’t get the boot at the end of 4 years. I’m not a supporter of blatant socialism.
          What positive growth we have in Canada is due to increased exports driven by our weak $ and our housing and construction boom-neither of which Trudeau or his band have anything to do with. The only economic stimulus policy he has in his quiver is infrastructure spending and he has yet to fire the first arrow.

          Currently the policies Trump is putting in place in the U.S. has the Dow growing at 4 times the TSX over the last year and GDP over the last two quarters at twice our rate. We should be doing just as well but aren’t. And, by the way, the unemployment rate is lower in the U.S. as well and consumer and business confidence much higher. We could use a big dose of that. I’m not a fan of Trump and would be quite happy if he got the boot and Pence took over. Then Trump’s agenda could move forward much more quickly and without all of the drama.

  4. 422,000 net jobs created this year alone?

    Yet the number if EI beneficiaries has stayed relatively flat at just over 500,000 since JT came into power?

    What’s happening here?

    • And the labour force participation rate is lower now than it was in January 2017 indicating that more people have given up looking and are thus removed from the unemployment calc.
      So, as is the norm with the current Liberal Government, there is a big error in their calcs or some slight of hand.

    • Unbelievable is right,the line about the 50% margin of error suddenly disappeared from all news reports,either the bank experts are fools or Statscan workers have sticky fingers.

      • do you have a link for the 50% margin of error? That seems extremely high in any quoted statistic I’ve ever seen

        • BOC predicted 2,000 net new jobs in Dec.
          Stats Can says 70,000 net new jobs in Dec.
          I would say that’s a lot more than 50%.
          Something fishy when the numbers are that far apart.

          • Not really. The Labour Force Survey is probably one of the most accurate surveys in existence. The methodology is extremely sound, and it has been working well almost completely unchanged since the 70s.

            I have an issue with the CPI, and GDP is always a little suspect, given the enormity of the task of trying to quantify the output of the entire economy, but I have total confidence in the Labour Force Survey. Unemployment and labour participation numbers are rock solid.

  5. So then now would be a good time to cut government spending and balance the budget, right? I mean, if you can’t run surpluses in the strongest economy in 40 years, when can you?

    • Good point-we should all give the boy a call.

    • just waiting for the budget to balance itself …. should be any time now ….

  6. Professors, journalists, economists and all others within certain peer groups seem to normally boast of robust statistics paired to job creation but do any of them actually do the walk. As a non member of any acedemia related organization I do although understand economics and statistics but most fellow Canadians do not or so I’m left to assume. To carefully unwrap and understand todays labour market is an exercise in observation and experience. Having entered the workforce in the mid 70’s and further observed and participated well within in it over the past 43 years and read in your article that 2018 brings with it an’unbelievable”, ‘ridiculously strong’ job market I simply don’t get or agree with your prediction. If you were to further suggest our working population is at an impass in terms of honest analysis with attached caveats like cheaper labor, less benefits, poor moral, unnecessary education requirements that over qualify and force many to take almost any job available to just merely exist I just might think you were hitting on something. Your prediction evades the hard facts and the utopian landscape you describe in your headline in nothing but a mirage. On the other hand I hope I’m wrong for the sake of our nation as it’s not my desire to rain on anyones premonition of any type of hope for increased prosperity and enhanced living standards.

    • It’s not a prediction, it’s based on last month’s numbers. The Labour Force Survey is about as sound and robust as they get. I have an issue with the CPI and its components, but the Labour Force Survey has been entirely consistent since the 70s and I trust the data in it.

  7. Ever get that creepy deja vu feeling?

    “You know Canada’s economy is an a tear when house prices in Saskatoon skyrocket nearly 50% in six months; when even northern outposts like Sudbury, Ont, are joining the real estate mania; when former New Brunswick Premier Frank McKenna heralds that province, with its sudden robust job market, as “Alberta with a view”; and when, back in the land where it all began, folks in Fort MacMurray Alta., still can’t find anyone willing to dress up as mascot Buddy the Buffalo for $25 an hour.

    “The boom is on. With each stunning economic announcement, analysts and business journalists have had to reach further back in time for cultural touchstones to illustrate just how great the country is doing.”

    (…)

    “Suffice to say, it’s been 30 years since Canada looked this good. Jobs are plentiful while more and more economists are predicting the unthinkable – that the loonie could reach parity with the U.S. greenback by year’s end.”

    –Macleans, June 25 2007, Jason Kirby & John Intini

    Yah, that worked out really well.

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