The job market is showing signs of slowing in Canada, but not in Quebec, where more jobs were created than in the rest of the country in November, and where the unemployment rate fell to its level on all-time low of 3.8%.
The previous record of 3.9% was set in April 2022, Statistics Canada said Friday.
The Quebec economy created 28,000 jobs last month, an increase concentrated in the Montreal metropolitan area, which has 25,000 more jobs. The unemployment rate remained unchanged at 4.2% in the Montreal region and settled at 2.7% in Sherbrooke, the lowest rate in Quebec.
In Canada, 10,000 jobs were created in November, which is a sharp drop from the 108,000 more jobs the previous month. The unemployment rate fell slightly, from 5.2% to 5.1%.
Spectacular turn of events
The resilience of the labor market continues to surprise economists, who have been expecting for several months that inflation and the successive increases in interest rates will result in a rise in the unemployment rate.
“The figures published by Statistics Canada take on the appearance of a dramatic turn,” commented Joëlle Noreau, economist at Desjardins. “Economic indicators for Quebec point to a pronounced slowdown since the summer,” she noted, and that slowdown is not yet apparent in employment.
“All is not rosy in this report”, temper the economists of the National Bank Matthieu Arsenault and Alexandra Ducharme: even if three provinces, including Quebec, record “spectacular” results, the seven others have experienced their worst performance since the month of May. They note the job losses in the construction and trade sectors.
“Although the data is generally good, they estimate, we continue to believe that the labor market will moderate in the months to come. »
Wages continue to rise
According to Statistics Canada, the average hourly wage continued to rise in November to reach $32.11. This is 5.6% more than in November 2021.
In Quebec, wages are rising even faster than in the rest of Canada, a sign that the job market is tighter. According to the Institut du Québec, the average hourly wage is growing at an annual rate of nearly 6% in Quebec. Wage growth therefore follows more closely the increase in prices measured by the Consumer Price Index for Quebec, which was 6.4% in October.
Full employment and labor shortage
Quebec is in a situation of full employment, with an unemployment rate of 3.8%, but this is not a cause for celebration for businesses, according to the president of the Conseil du patronat, Karl Blackburn. “The economic strength is there, but the challenge remains the labor shortage,” he said in an interview with The Press.
There are nearly 250,000 vacant positions in Quebec, he points out, which translates into a deficit of services in the public sector and economic losses in the private sector.
The number of job vacancies in certain trades is up sharply, according to Statistics Canada, while Canada has the most educated workforce of the G7 countries. The president of the Conseil du patronat recognizes this reality, but he believes that the labor shortage affects all sectors, without exception. He is delighted that Prime Minister François Legault has taken a further step towards an increase in immigration in his inaugural speech. “Companies can invest well and do training, but without employees it’s like fishing in an empty lake,” he says.
Interest rate: 25 or 50 points?
The picture of employment and an economy that is still growing at an annual rate of 2.9% in the third quarter complicates the task of the Bank of Canada, which is counting on a slowdown to quell inflation.
The next key rate hike, on December 7, could well be 50 basis points rather than 25 points, given these latest developments. After six increases since the start of the year, the key rate is currently 3.75%.
“We wouldn’t be surprised if the central bank waits until January before reducing the pace of rate hikes to 25 points,” says Laurentian Bank’s chief economist, Sébastien Lavoie.
At Desjardins, we expect a more modest increase of 25 basis points. “The weakness of Canadian domestic demand in the third quarter, modest hiring and the absence of signs of an acceleration in wage growth mean that the tightening that will be announced should be modest,” said senior economist Marc Desormeaux.