The first month of 2019 saw 66.8k Canadian jobs created, on net. The unemployment rate rose to 5.8% as more Canadians were looking for work, sending the labour force participation rate 0.2 p.p. higher, to 65.6%.
The composition of the gains was high quality. 30.9k full-time jobs were added, with 36k part-time. Public sector employment was up 15.9k as private hiring roared ahead by 111.5k net positions – the strongest gain on record. Bringing the total back down was a 60.7 net drop in self-employment.
Younger Canadians led the way, with 52.8k net positions added among those aged 15 to 24. Employment was little changed among working age and older Canadians.
The service sector led hiring in January, adding 99.2k net positions, helped by trade (+33.9k), professional services (+28.5k), and public administration (+21.1k). In contrast, the goods sectors pulled back by 32.3k overall, on broad-based weakness across subsectors.
Encouragingly, wages accelerated a hair to 1.8% y/y for permanent employees (up from 1.5% in December), despite the boost from last year’s minimum wage hike falling out of the data. In contrast to the strong headline gains, aggregate hours worked fell 0.3% in January.
On a trend basis, labour markets remain solid. The six month average pace of hiring stood at 32.8k per month in January, with employment up 1.8% year-on-year.
Key Implications
What a pleasant surprise. With the exception of hours worked, this was a solid report. Not only did we see the strongest private hiring gains on record, the increase in the unemployment rate was for the ‘right’ reason as more Canadians were drawn to labour markets in January. In fact, another record was broken for the participation rate among core-aged (25-54 year old) Canadians, at 87.6%. Today’s data continues the solid trend that typified last year’s labour market performance
While we should hardly throw a parade for one month’s data, the uptick in wage growth after a few months in the doldrums is a welcome development, particularly as the boost from last year’s minimum wage hike should be largely out of the data.
For the Bank of Canada, this is an encouraging report, both in terms of some early vindication in the wage data, as well as the strength of employment gains among the youngest age groups – an area that Governor Poloz has expressed concern about in the past. Elevated risks, energy sector adjustments and benign underlying inflationary pressure all suggest little reason to hike any time soon, but today’s data is more reason to believe further rate hikes have only been delayed, not eliminated.
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