Wage growth continues to slow, say economists, as U.S. shutdown disrupts release of economic data
Canada’s job market is showing signs of stabilization, with hiring demand holding steady and wage growth continuing to slow, according to a new report from RBC Economics.
The report, authored by assistant chief economist Nathan Janzen and economist Abbey Xu, forecasts a modest increase of 10,000 jobs in October, with job numbers set to be released on Nov. 7.
“Monthly employment changes are notoriously volatile,” Janzen and Xu note, pointing to a 60,000 jump in employment in September, which followed declines of 66,000 and 41,000 in August and July, respectively, and an 83,000 surge in June.
Despite these fluctuations, the unemployment rate is expected to remain at 7.1% in October.
“Even modest growth in employment over time is enough to keep the unemployment rate from rising,” the economists write. The current rate is up 0.5% from a year ago, but just 0.1 percentage points higher than in May.
Job openings in Canada
Janzen and Xu highlight that job openings, as tracked by Indeed.com, “have been holding broadly steady, and layoffs have been limited.” They add that most of the recent rise in unemployment has come from “longer job searches for new entrants,” with youth unemployment described as “particularly elevated.”
While heavily trade-exposed industries such as manufacturing and transportation services are expected to remain under pressure, “job growth in the rest of labour markets remains broadly positive,” according to the report.
The September job numbers were a reminder that volatility doesn’t just work in a downward direction, said the senior economist at Indeed Canada.
“The Canadian labour market capped off a choppy third quarter on the upside, with employment posting a solid 60,000 increase, reversing nearly all of the decline of a month prior.”
Slowing wage growth
On wages, Janzen and Xu observe that “wage growth has mostly continued to show signs of slowing.”
They suggest that hours worked will be an important early indicator of economic momentum in the fourth quarter.
Despite an unexpected GDP decline in August, the economists point to “an upward revision to July output and signs that the economy grew in September,” leaving GDP “tracking closely to our base case forecast of 0.5% growth.”
Federal budget, U.S. shutdown
The RBC report comes as policymakers and businesses look to the upcoming federal budget on Nov. 4 for further signals on economic direction, particularly as global uncertainty and trade pressures persist.
The ongoing US government shutdown continues to disrupt the release of critical economic data, with key reports—including September international trade figures and October employment numbers—unlikely to be published as scheduled, according to RBC Economics.
The shutdown has also prevented the release of Canada’s international trade data for September as Statistics Canada confirmed that essential US import data used to calculate Canadian exports has not been provided due to the federal closure.
