Canada’s labor market added 25,000 jobs in November, surpassing the expectations of economists who had forecast a gain of 15,000 positions. However, the unemployment rate also increased to 5.8 percent, up from 5.7 percent in October, as more people entered the labor force in search of work.
The latest labor force survey from Statistics Canada showed that the job gains were driven by full-time work, which rose by 39,000, while part-time work declined by 14,000. The private sector added 32,000 jobs, while the public sector lost 6,000. Self-employment was little changed.
The report also revealed some signs of weakness in the labor market, such as a drop in total hours worked, which fell by 0.3 percent compared to a year ago. The number of people who wanted to work but did not look for a job also increased by 34,000, or 4.5 percent, the largest monthly increase since 2015.
Finance and real estate sectors hit hard by job losses
The job gains in November were concentrated in a few industries, such as construction, which added 20,000 jobs, and information, culture, and recreation, which added 18,000. On the other hand, some sectors experienced significant job losses, especially finance, insurance, real estate, and leasing, which shed 32,000 jobs, the largest monthly decline since 1987.
The finance and real estate sectors have been facing headwinds from rising interest rates, tighter mortgage rules, and cooling housing markets in some regions. According to a report by the Canadian Real Estate Association, home sales in November were down 12.6 percent compared to a year ago, while the national average price was down 2.9 percent.
Other sectors that lost jobs in November were manufacturing, which lost 13,000 jobs, and transportation and warehousing, which lost 9,000. The services sector as a whole added 17,000 jobs, while the goods-producing sector added 8,000.
Regional disparities persist across the country
The labor market performance in November also varied widely across the provinces and territories. Quebec and Alberta posted the largest job gains, adding 26,000 and 24,000 jobs respectively. Both provinces also saw their unemployment rates decline, with Quebec’s rate falling to 5.4 percent, the lowest on record, and Alberta’s rate falling to 6.3 percent, the lowest since 2015.
Meanwhile, Ontario and British Columbia saw their job numbers decline, losing 13,000 and 18,000 jobs respectively. Ontario’s unemployment rate rose to 5.6 percent, while British Columbia’s rate rose to 4.4 percent, still the lowest among the provinces.
Nova Scotia and Newfoundland and Labrador also lost jobs in November, while the other Atlantic provinces saw little change. The unemployment rate in Newfoundland and Labrador remained the highest in the country at 12.2 percent, while the rate in Prince Edward Island was the lowest among the Atlantic provinces at 8.5 percent.
The outlook for the labour market remains uncertain
The mixed signals from the labor market in November pose a challenge for the Bank of Canada, which has been gradually raising its key interest rate to keep inflation in check. The central bank has hiked its rate five times since July 2022, bringing it to 1.75 percent, the highest level since 2008.
The bank has signaled that it will continue to raise its rate gradually, but it has also acknowledged the risks and uncertainties facing the economy, such as trade tensions, high household debt, and low oil prices. The bank’s next interest rate decision is scheduled for January 9, 2023.
Economists have different views on the outlook for the labor market and the economy in the coming months. Some are optimistic that the job market will remain resilient, while others are more cautious and expect a slowdown.
According to Avery Shenfeld, chief economist at CIBC Capital Markets, the November jobs report was “a bit better than expected, but not enough to move the needle on the Bank of Canada’s thinking.” He said that the bank will likely wait for more data before deciding on its next rate hike, which he expects to happen in April 2023.
However, David Madani, senior Canada economist at Capital Economics, was more pessimistic, saying that the November jobs report was “a clear sign that the economy is losing momentum.” He said that the bank will likely have to reverse course and cut its rate in 2023, as the economy faces a recession.
