CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

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CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

CANADA'S LEADING INFORMATION SOURCE FOR THE METALWORKING INDUSTRY

Canadian economy still adding jobs, manufacturing wage growth surges

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Pay gains remain robust in manufacturing even though the sector’s job vacancies have been trending lower. This indicates that manufacturers continue to face significant challenges finding workers. PHOTO courtesy OptiMax.

Despite fears of recession, Canadian employment surged by 104,000, a 0.5% gain, in December. It was the fourth straight monthly gain.

More importantly, the month’s increase was driven by full-time work (+85,000) and by private sector employment (+112,000), signs of private sector confidence. Employment was up in 10 of 16 industries.

But it’s not all positive news.

Manufacturing employment fell by 7,800 (-0.4%) in December, the sector’s first decline in three months. The job cuts in December coincided with recent softness in other key indicators like GDP, exports, and manufacturing sales, comments Alan Arcand, chief economist with Canadian Manufacturers & Exporters. Looking at manufacturing’s employment performance over the course of the entire year, manufacturers added 13,000 positions in 2022. That’s down substantially from the 62,200 new hires in 2021, a very strong year for manufacturing. Still, thanks to these back-to-back gains, the industry’s employment climbed to an average of 1.748 million last year, the highest level since 2012.

“Canada’s labour market continues to show resilience in the face of growing headwinds. Although the Bank of Canada has indicated that its rate-hike campaign is nearing an end, the strength of this report supports the view that the Bank has another hike left in store,” Arcand notes. The Bank of Canada’s next meeting is scheduled for January 25th.

The headline unemployment rate ticked down 0.1 percentage points to 5.0% in December. This was the third decline in four months and left the rate just above the record low of 4.9% reached in June and July. At the same time, the jobless rate in manufacturing dropped 0.2 percentage points to 2.8%, also just 0.1 percentage points shy of its all-time low.

WAGE GROWTH IN MANUFACTURING SURGES

While the unemployment rate sits near a record low, job vacancies have started to fall, with the declines concentrated in industries that are more sensitive to interest rates. This could help explain the moderation in headline wage growth. Indeed, the average hourly wage rate in the overall economy decreased by 0.2% in December. On a year-over-year basis, wage growth decelerated from 5.6% in November to a still-firm 5.1% in December.

In contrast, pay gains remain robust in manufacturing, Arcand says, even though the sector’s job vacancies have also been trending lower.

“This indicates that manufacturers continue to face significant challenges finding workers. In fact, average hourly earnings in the manufacturing sector rose 1.0% in December, the fifth straight monthly advance. As a result, year-over-year wage growth surged from 6.9% in November to 8.2% in December, more than three times the sector’s historical average of 2.5% and the second-highest rate on record.”

EMPLOYMENT INCREASE WIDESPREAD ACROSS PROVINCES

Regionally, the employment increase spanned 9 of 10 provinces. The largest absolute gains were recorded in Ontario (+42,100), Alberta (+24,500), and BC (+16,600), while the largest proportional increase was observed in Newfoundland and Labrador (+6,700). This was Alberta’s first notable job growth since May 2022.

In the manufacturing sector, employment was down in five provinces in December. The lion’s share of the decrease was registered in Ontario (-6,900), its first drop in three months. In proportional terms, noteworthy declines were also observed in Nova Scotia (-2,000) and Saskatchewan (-1,100), while significant gains were posted in PEI (+600) and Newfoundland and Labrador (+600).

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