Question Period Note: Labour Force Survey: November 2022

• Employment rose by 10,000 in November, matching market expectations.
• The unemployment rate edged down to 5.1% in November, while the labour force participation rate eased to 64.8%.

• Employment gains in November show Canada’s labour market remains resilient.
• With more than 500,000 Canadians employed compared to pre-COVID levels, Canada’s labour market remains healthy.
• The unemployment rate declined to 5.1 per cent, near multi-decade lows.
• The 2022 Fall Economic Statement makes investments in workers to grow Canada’s economic, create good-paying jobs, and tackle Canada’s investment and productivity challenges.

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• Bottom Line: As expected, employment was little changed following a surprise surge of +108,000 jobs in October. Beyond the volatility, employment gains have eased over the last few months, with the average monthly increase over the last six months slowing to just 4,000. The details of the November report suggest a healthy labour market, with job gains driven by full-time jobs (+51,000) and the private sector growth (+25,000). The unemployment rate edged down to 5.1%, owing to a decrease in the labour force participation rate, and is close to its multi-decade low (5.4% in May 2019). Wage growth remained elevated at 5.6%, but was broadly stable over the last few months.
• Recovery Relative to Pre-Pandemic: Employment is now 523,000 (+2.7%) above its pre-pandemic level. Overall, 117% of the jobs lost since the peak of the pandemic have been recouped in Canada, and well ahead of the U.S. (105%). Among Canadians aged 15-64, the labour force participation rate edged down to 79.3%, though still well above the U.S. rate of 73.8%. Adjusted for U.S. concepts, the unemployment rate edged down to 4.0%, very close to the U.S. rate of 3.7%.
• Full-time Jobs and Hours Worked: Full-time work (+51,000) drove all of November’s job gains, as part-time work (-41,000) contracted. Total hours saw little change, now sitting 1.6% above their pre-pandemic level.
• Industries: Employment gains were mixed with growth in just 8 of 18 industries. Employment in the services industries rose by 20,000 led by gains in finance, insurance, real estate, rental and leasing (+21,000), information, culture and recreation (+16,000) and educational services (+12,000). This was partially offset by losses in wholesale and retail trade (-23,000), as rising interest rates are starting to weigh on consumer spending. Goods producing industries saw losses of 10,000, led by construction (-25,000), and partially offset by gains in manufacturing (+19,000). Overall, gains were led by the private sector (+25,000) and the self-employed (+10,000), balanced against losses in the public sector (-25,000).
• Provinces: Gains were concentrated in Quebec (+28,000) and Ontario (+23,000), with losses in Alberta (-15,000), British Columbia (-14,000), and Manitoba (-5,000).
• Demographics: The increase in employment was driven largely by core-aged (25-54) workers (+38,000). The labour force participation rate among youth (15-24) fell 0.8 percentage points to 63.6%, but is near its pre-pandemic level.
• Wages: On a year-over-year basis, wages rose by 5.6% in November, on par with October, but still well above the 3.4% seen pre-pandemic (2019 average). Momentum eased, with 3-month wage growth at 5.1% annualized (seasonally adjusted), down from 6.0% in October. After adjusting for changes in the composition of the workforce, year-over-year wage growth was slightly lower, at 4.9% in November.
• Outlook: November’s gain shows that labour market conditions remain exceptionally tight, but this tightness is gradually easing. We are beginning to see signs of slowing as interest-sensitive industries like construction and retail/wholesale trade saw losses. Going forward, we are likely to see some softening in labour market conditions as the domestic and global economic backdrop continues to deteriorate and the impact of interest rate hikes has yet to fully be felt.