Canada shed 88.8k positions in January, ending the economy’s 17-month streak of job gains.
Losses were concentrated in part-time jobs, which fell a staggering 137k. Full-time jobs, on the other hand, were up a healthy 49k.
Despite the magnitude of decline, the unemployment rate edged up just a notch to 5.9% (from 5.8%), as 73.7k people left the labour force. As a result of the exodus, the participation rate ticked down to 65.5% (from 65.8%).
Both public and private sectors shed jobs in the month, with public employment down 41.2k and private-sector jobs down 70.7k. Self-employment bucked the trend, adding 23.9k positions.
Good-producing industries shed 16.2k positions, led by construction (-14.9k). Manufacturing employment, on the other hand, edged up 0.8k. Service-producing employment fell 71.9k, with losses relatively widespread across sectors. Surprisingly perhaps, trade (wholesale and retail) were not major contributors (down just 0.8k).
Regionally, losses were relatively widespread, and gains relatively minimal. Ontario was the biggest loser in January, shedding 50.9k jobs in the month. Despite the drop, Ontario’s unemployment edged down ever so slightly (to 5.5%) as 54.8k people left the labor force. In Quebec, employment fell 17.3k and the unemployment rate reversed the prior month’s decline, moving back up to 5.4% (from a record-low of 5.0% in December).
Wage growth accelerated in the month to 3.3% (from 2.8% in December).
Key Implications
You win some, you lose some. After a record-breaking string of gains, Canada’s job market was due for a pullback. This is a big number on the surface, but so were the gains over the previous several months.
All told, this does not change the story for the Canadian economy much. The unemployment rate is still low with the economy remaining close to full employment.
Wage growth heated up this month but did not accelerate to the pace expected given the minimum wage legislation being implemented in Ontario. Still, more gains may be on the way in the months ahead, with the metric likely to be closely watched going forward.
This report does not much change the outlook for the Bank of Canada, but suggests a more rationale pace of job growth consistent with an economy that is moving toward a more neutral pace of growth after a very robust year.
