The Canadian economy saw an increase of 64,000 jobs last month, reflecting the rapid growth of the country’s population. According to the September labour force survey released by Statistics Canada, the unemployment rate remained steady at 5.5 percent for the third consecutive month. Despite rising interest rates, which has caused the labor market to cool down over the past year, the unemployment rate remains lower than pre-pandemic levels.
In terms of job gains, the majority of the growth was seen in part-time work, while the total number of hours worked remained the same as in August. The sectors that experienced an increase in employment were educational services and transportation and warehousing. However, there were job losses observed in finance, insurance, real estate rental and leasing, information and recreation, and construction.
The impact of the Bank of Canada’s rate hikes since March 2022 is now being felt in the Canadian economy, as growth slows down and job vacancies decrease. Currently, the central bank’s key interest rate stands at five percent, the highest it has been since 2001. It is expected that higher interest rates will continue to weigh on the economy and affect businesses’ willingness to hire.
Despite these challenging conditions, wage growth has actually outpaced inflation this year, compensating for previous losses to price growth. Average hourly wages in September grew by 5.0 percent compared to the previous year, while inflation stood at 4.0 percent in August. Economists note that wage growth tends to be a lagging indicator of economic conditions as workers typically request higher wages to offset past increases in the cost of living.