Highlights:
- April employment ticked slightly lower but the unemployment rate held at a very low 5.8% rate.
- Full-time jobs jumped 29k after a 68k March gain. Part-time jobs fell 30k in April.
- The unemployment rate was 5.8% in April for a third straight month. The 5.8% average in Q1 was the lowest since the mid-1970s.
- Wage growth accelerated to 3.6% year-over-year — 3.1% excluding Ontario where minimum wages
Our Take:
Canadian employment was little changed in April, slipping 1k lower after rising 32k in March. Details were generally solid. Full-time employment jumped another 29k higher after a 68k surge in March with offset from a second straight drop in part-time jobs. The unemployment rate held at 5.8% for a third straight month — and fourth of the last five. Prior to November, the unemployment rate had only been that low in one month in more than 4 decades. The participation rate ticked lower in April but seemingly largely due to the aging population. The participation rate for 25-54 year-olds rose to 86.9% in April.
Employment/unemployment data has been strong for a while. A missing ingredient to stronger labour markets last year — and arguably the last remaining argument that labour markets aren’t already operating close to long-run capacity limits — was stronger wage growth. On that front, the data has been notably better to-date in 2018 and showed further improvement in April. Year-over-year wage growth ticked up to 3.6% in April, its fastest pace since October 2012 and a sharp reversal from a year ago when wages were rising just 0.7%. Not all of that increase is tied to a big minimum wage hike in Ontario in January, either. By our calculation, wage growth ex-Ontario rose to 3.1% in April from an average 2.9% in Q1. Yes, economic growth has slowed, but that’s not such a bad thing with evidence mounting that the economy is already pretty close to long-run capacity limits. The data still argues that the Bank of Canada will ultimately need to hike rates further from what are still highly stimulative levels although competitive headwinds, trade uncertainty, and concerns about highly leveraged households also still argue that the pace is likely to be very gradual.
