Canada's job market is showing no signs of slowing down, with employment growing much faster than expected in January. The economy added an impressive 150,000 jobs (according to Satistics Canada), 10 times more than what was estimated by a Bloomberg survey. The unemployment rate remained steady at 5%, close to a record low. This is the fifth consecutive month of job increases, bringing the total employment growth since September to 326,000. According to the latest population estimates, in the third quarter of 2022, Canada's population grew at the fastest rate in over 50 years, (mostly driven by an increase in non-permanent residents.)
The strong job market numbers prompted a reaction from bonds and the Canadian dollar. The benchmark two-year yield jumped to 4.13%, and the Canadian dollar rose about 0.5% to C$1.3381 per US dollar.
This news raises questions about the Bank of Canada's recent interest rate hikes and whether they are sufficient to slow down the economy. Governor Tiff Macklem has already raised benchmark borrowing costs by 425 basis points to 4.5% in less than a year and is expecting the economy's growth to slow to near zero in the first three quarters of 2023. The Bank of Canada has stated that it will hold borrowing costs constant, but could raise them further if necessary.
Canada's rapid population growth due to open immigration policies is also contributing to the strong job market. Non-permanent residents, including students and temporary workers, are seeing substantial job gains. The labour force participation rate increased 0.3 percentage points to 65.7%, with the labour force growing by 153,000, or 0.7%.
The country is following in the footsteps of the United States, which also saw an unexpected surge in employment, defying recession forecasts in both economies. The US nonfarm payrolls increased by 517,000 last month, and the unemployment rate dropped to 3.4%, the lowest since May 1969.
At a glance:
- In Canada, average hourly wages rose 4.5% in January, down from 4.8% in December. Governor Macklem stated earlier this week that wage growth in the range of 4% to 5% is not consistent with getting inflation back to the 2% target unless there is surprisingly strong productivity growth.
- January's employment growth was seen in five provinces, including Ontario, Quebec, and Alberta, and in six industries, with wholesale and retail trade leading the way. Total hours worked rose 0.8% on a monthly basis, the fastest pace since May, and up 5.6% compared to a year earlier.
- The job market in Canada is booming, and the latest statistics show that available jobs in the oil and gas and energy industry is thriving. This is great news for the country's economy, and it is expected to continue to grow in 2023 and beyond.
With respects to the the oil and gas industry in Canada, Canada is poised for growth in 2023 and beyond, with new opportunities for employment in the energy sector. In recent years, the country has emerged as a major player in the global energy market, with vast reserves of natural resources including oil, natural gas, and renewables. The industry has been undergoing a transformation, with the adoption of new technologies, increased efficiency, and a focus on sustainability, driving growth and creating new jobs.