Photographer: Abigail Saxton/Bloomberg

Canada Wage Gains Fall to Record Low as Jobs Run Stalls

Updated on
  • Annual pay increases slow to 0.7%, with Ontario gain at 0.2%
  • Country still in midst of strong employment gains since 2012

Canada’s run of job gains stalled in April and wage gains slowed to record lows, casting a shadow over what had been a stellar employment performance.

Canada added 3,200 jobs during the month, Statistics Canada reported in Ottawa, less than the 10,000 employment gain forecast by economists. The pace of annual wage rate increases fell to 0.7 percent in April, the lowest in records dating back to the late 1990s.

Canada’s unemployment rate fell to 6.5 percent, the lowest since October 2008, but this reflects the departure of 45,500 people from the labor force. About half of those were youth, meaning many young people looking for work have stopped looking.

Key Points

  • While the number of jobs added was relatively small in April, one-month does not make a trend and the recent employment picture has been strong. The country has had positive job gains for six straight months, and over the past nine months has added 277,000 jobs. That’s the best performance since 2012.
  • Other positive signs include hours worked numbers that show gains of 1.1 percent over the past 12 months and the falling unemployment rate.
  • Yet the wages puzzle, which has been cited by the Bank of Canada as evidence of slack in the economy, persists. There’s little sign that what seems to be a robust employment picture is feeding into wages. In fact, it’s the opposite. For historical perspective, wage gains have averaged 2.7 percent over the past decade.
  • Adding to the mystery is that Ontario is the major source of wage sluggishness, with pay increases of 0.2 percent year-over-year. Full-time jobs also are showing slower wage gains than the national average.

Big Picture

Policy makers at the Bank of Canada have been wary of recent upswing in economy data and this report will probably feed their worries even with the job gains. While economic growth has been accelerated and employers are hiring, it’s tough to conclude the recovery has fully taken hold without a pick-up in wages.

Market Reaction

Nick Exarhos, CIBC World Markets: “Canadian employment took a pause in April, likely to catch its breath after its remarkable run over the past several months. Jobs were up a slim 3K on the month, although the composition suggests some slippage in overall quality.”

Other Details

  • The nation lost 31,200 full-time jobs, and gained 34,300 part-time jobs during the month.
  • All the job gains were self-employed and public sector. Canada lost 50,500 jobs in the private sector.

— With assistance by Erik Hertzberg

(Adds analyst comment in eighth paragraph.)
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