Quebec | Unemployment rate hits 4.5% in January

(Ottawa) The Bank of Canada will be in no rush to cut interest rates after Statistics Canada reported a larger-than-expected employment gain last month, economists say.

The federal agency’s labor force survey released Friday shows the economy added 37,000 jobs in January after several months of almost no change in employment.

Canada’s unemployment rate slipped 0.1 percentage point to 5.7% last month, marking the first decline since December 2022. In Quebec, employment was little changed for a fourth consecutive month in January and the unemployment rate reached 4.5%, down 0.2 percentage points.

“I would say the labor market is tighter than expected, but not necessarily stronger than expected,” said Andrew Grantham, director of economics at CIBC. That’s because, certainly, employment has continued to grow a little faster than the consensus expected. But that really pales in comparison to the sharp increase in population. »

The Canadian population aged 15 and over increased by 0.4% between December and January, far outpacing the 0.2% growth in employment.

The labor market cooled significantly in 2023 as high interest rates weighed on consumer spending and business investment, pushing the nation’s unemployment rate to 5.8% from 5.1% in April. % in December.

Although the jobs report has some weaker elements, the relatively good state of the labor market suggests to economists that the central bank may be taking its time when it comes to cutting interest rates.

“Today’s data is certainly not going to accelerate the Bank of Canada’s timetable,” Mr. Grantham said.

CIBC is not changing its forecast on the timing of the first rate cut, as it still expects the central bank to lower its key rate starting in June. But she now expects the bank to cut rates overall by a smaller amount this year.

Employment increased in several sectors in January, with gains led by wholesale and retail trade as well as finance, insurance, real estate, rental and leasing.

Meanwhile, accommodation and food services saw the largest employment decline.

Wages continue their momentum

Workers’ wages continued to grow rapidly last month as Canadians seek compensation for past inflation. The average hourly wage, which has been growing steadily at an annual rate of 4 to 5 percent, jumped 5.3 percent compared to the same month last year.

Statistics Canada says wage growth has been stronger for women and higher-income earners. Although men continue to earn more on average than women, women’s average hourly wages increased by 6.2%, compared to 4.4% for men.

For employees in the top 25% of the pay scale, their salaries increased by 5.9%, compared to 4.6% for those in the bottom 25%.

The Canadian labor market has been supported by strong population growth, driven by permanent and temporary immigration.

Compared to last year, the economy created 345,000 jobs, while the working age population increased by one million people.

While the Bank of Canada maintains its key interest rate at 5%, economists’ forecasts suggest that unemployment will increase throughout this year.

Employment increased by 0.03% in Ontario. In Nova Scotia, it increased by 0.7%, but from December to January, the unemployment rate jumped from 5.9% to 7%.

Compared to the previous month, the unemployment rate increased in New Brunswick, from 6.3% to 6.6%. Meanwhile, it declined in Prince Edward Island, from 8.1% to 7.4%.

Corrected version. The Canadian Press wrote that the unemployment rate in Quebec remained unchanged at 4.5%. In fact, it’s a drop of 0.2 percentage points.


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