In the manufacturing sector, average hourly earnings decelerated sharply from 5.3% year-over-year in December to 4.0% in January, the slowest pace since July 2022. PHOTO courtesy Flow.
Manufacturing employment in Canada fell 6,200 (-0.3%) in January, the third decline in four months and indicative of the continuing loss of momentum and weakness in the sector.
“The last several months have been challenging for manufacturers as they face numerous headwinds, including persistent workforce challenges, high interest rates, and soft global demand,” comments Alan Arcand, chief economist with Canadian Manufacturers & Exporters. “Still, with forecasters predicting that the world economy is heading for a soft landing and that central banks around the world will cut rates this year, manufacturing activity is expected to gradually improve through 2024.”
Overall, Canadian employment rose 37,300 (+0.2%) in January, following three months of little change. Elsewhere, employment was up in 6 of the remaining 15 major industries. The headline unemployment rate fell 0.1 percentage points to 5.7% in January, the first decline since December 2022. Likewise, the jobless rate in manufacturing inched down a tick to 3.6%, still a full percentage point higher than the record low of 2.6% observed in January 2023.
WAGE GROWTH IN MANUFACTURING SLOWS SHARPLY
Headline wage growth slowed slightly to 5.3% year-over-year in January, from 5.4% in the previous month.
“Despite the slowdown, this pace of growth is still incompatible with the Bank of Canada’s 2-per-cent inflation target,” Arcand says. “Although the manufacturing sector has typically experienced much more intense wage pressures than that of the overall economy, the script flipped in January. In the manufacturing sector, average hourly earnings decelerated sharply from 5.3% year-over-year in December to 4.0% in January, the slowest pace since July 2022.”
ONTARIO LEADS OVERALL EMPLOYMENT GAINS, THOUGH FACTORY JOBS FALL
Regionally, employment increased in 7 of 10 provinces in January. The biggest absolute gain was recorded in Ontario (+23,800), while the largest proportional increases were observed in Newfoundland and Labrador (+7,500) and Manitoba (+6,900). However, even with last month’s gain, employment in Ontario has increased by 1.1% over the last 12 months, which trails the national growth rate of 1.7%. On the negative side, employment in Quebec and Saskatchewan declined by 7,500 and 6,200, respectively, last month.
In the manufacturing sector, employment was up in just four provinces in January. Quebec saw the biggest increase (+3,900), while Ontario (-4,100) experienced the steepest decline. In proportional terms, a meaningful increase was also observed in PEI (+500). Taking a longer-term view, manufacturers in Ontario (+9,500) have created the most jobs over the past year, while manufacturers in Newfoundland and Labrador (-2,500) have shed the most workers.
