The job market is showing signs of slowing in Canada, but not in Quebec, where more jobs were created than the rest of the country in November, and where the unemployment rate fell to its lowest level of 3.8%.
The previous record of 3.9% was set in April 2022, Statistics Canada said on Friday.
Quebec’s economy added 28,000 jobs last month, an increase concentrated in the Montreal metropolitan area, which has 25,000 more jobs. The unemployment rate was unchanged at 4.2% in the Montreal region and stood at 2.7% in Sherbrooke, the lowest rate in Quebec.
In Canada, 10,000 jobs were created in November, a sharp drop from 108,000 more jobs the previous month. The unemployment rate dropped slightly, from 5.2% to 5.1%.
Spectacular turn of events
The resistance of the labor market continues to surprise economists, who have been expecting for several months that inflation and the successive rises in interest rates translate into an increase in the unemployment rate.
“The figures released by Statistics Canada appear to be taking a dramatic turn,” said Joëlle Noreau, an economist at Desjardins. “Quebec’s economic indicators point to a pronounced slowdown since the summer,” she noted, and that slowdown is not yet evident in employment.
« All are not rose in my rapport », tempered by the economists of the National Bank Matthieu Arsenault and Alexandra Ducharme: same if three provinces, in Québec, enregistren des résultats « spectacular », the sept autres ont connu leur fire performance after the month of May. They point to job losses in the construction and trade sectors.
“Although the data in general is good, they estimate, we continue to believe that the labor market will moderate in the coming months. »
wages keep rising
According to Statistics Canada, the median hourly wage continued to rise in November to $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 median hourly wage is growing at an annual rate of almost 6% in Quebec. Thus, wage growth more closely tracks price increases as measured by the Quebec Consumer Price Index, 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 cause for celebration for companies, 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 Press.
There are about 250,000 job vacancies in Quebec, he points out, which translates into service deficits in the public sector and economic losses in the private sector.
The number of job vacancies in certain trades has risen sharply, according to Statistics Canada, while Canada has the most educated workforce of the G7 countries. The president of the Conseil du patronat acknowledges this reality, but believes that the labor shortage affects all sectors, without exception. He is delighted that Prime Minister François Legault took another step towards increasing immigration in his inaugural speech. “Businesses can invest well and get trained, but without employees it’s like fishing in an empty lake,” he says.
Interest rate: 25 or 50 points?
The outlook for employment and an economy that continues to grow at an annual rate of 2.9% in the third quarter complicates the task of the Bank of Canada, which is betting on a slowdown to quell inflation.
The next key rate hike on December 7th could well be 50 basis points instead of 25 given these latest developments. After six increases since the beginning of the year, the reference rate currently stands at 3.75%.
“We wouldn’t be surprised if the central bank waits until January before slowing rate hikes to 25 points,” says Laurentian Bank chief economist Sébastien Lavoie.
At Desjardins, we expect a more modest increase of 25 basis points. “Weak Canadian domestic demand in the third quarter, modest hiring and no signs of accelerating wage growth means the adjustment to be announced should be modest,” said senior economist Marc Desormeaux.
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