Slumping Wage Growth Mars Unexpected Surge in Canadian Jobsby
Country adds 48,300 positions in January, led by services
Pay gains at slowest since 2003, pointing to underlying slack
Canada’s workers are getting plenty of jobs, just not wage increases.
Data released Friday show a labor market that’s finally beginning to create new jobs, while at the same time offering little evidence that’s translating into higher incomes for workers as wage growth and hours worked slump.
It’s a conundrum that casts a shadow over the report, which showed 48,300 workers hired in January on the heels of a 46,100 gain in December.
“There’s definitely momentum on the jobs front,” Derek Holt, head of capital markets economics at Bank of Nova Scotia, said by phone from Toronto. “It’s still healthy to be skeptical about the durability going forward.”
The unemployment rate fell a tenth of a point to 6.8 percent, the statistics agency said from Ottawa. Economists had called for a drop of 10,000 positions and for the jobless rate to remain unchanged. The country’s labor market extended its momentum from the second-half of last year when it posted the fastest quarterly hiring since 2010.
Still, wage data showed underlying weakness that may complicate matters for Bank of Canada policy makers. Average hourly wages for permanent employees increased 1 percent in January from a year earlier, the slowest pace of growth since at least 2003. Hours worked also fell 0.8 percent from a year earlier.
“Wages have softened further,” Mark Chandler, head of fixed-income research at RBC Capital Markets in Toronto, said by phone. “The job growth itself is okay but it still doesn’t point to a tight labor market overall.’
Canada’s dollar reacted to the headline numbers, strengthening 0.5 percent to C$1.3086 per U.S. dollar at 8:55 a.m. Toronto time. Two-year government bond yields increased to 0.78 percent from 0.75 percent.
Most of the gains came from two categories -- a 20,500 increase in finance, insurance, real estate and leasing and another 16,400 in business, building and other support services -- and for men aged 25 to 54, with the increase of about 30,000 the largest in more than two years.
It was split between 32,400 part-time positions and 15,800 full-time jobs.