Labour market holding up, for now

Payrolls and employee earnings both ticked up in January, according to new data from Statistics Canada.

The national statistical agency reported that payroll employment was up by 0.2% in January, as employment increased in 13 out of 20 sectors, led by the retail, manufacturing and financial sectors. These gains were partly offset by declines in construction and management.

On a year-over-year basis, payroll employment was up by 1.2% in January. The finance sector saw employment rise by 1.3% over the period, and in January, gains were concentrated in the securities brokerage business, StatsCan noted.

Alongside the employment gains, average weekly earnings were up 0.7% in January, reversing a 0.4% decline in December 2023. On a year-over-year basis, average weekly earnings rose at a 3.9% rate.

Additionally, StatsCan reported that the number of vacant jobs were essentially unchanged in January, but, for the year, the number of openings was down 26.4%.

Total labour demand — the combination of filled and vacant jobs — was up by 0.2% in January, but was down by 0.3% year over year.

Looking ahead to next week’s jobs data, RBC said its forecast is that about 25,000 new jobs were added in March, down from the previous month.

However, with labour supply continuing to rise, the unemployment rate is still expected to tick up to 5.9% from 5.8% in January, the bank suggested.

“Rising business bankruptcies and a decline in the number of active businesses overall will limit private sector hiring, resulting in employment growth once again falling short of the still-elevated pace of population growth,” noted CIBC World Markets, which also expects to see the jobless rate creep higher next week.

“A loosening labour market will give the [Bank of Canada] the confidence it needs to start reducing interest rates, but the gradual way it is happening suggests no immediate urgency to cut in April,” it said.