Understanding the Canadian Labor Market: Trends and Challenges

In the latest labor force survey, the Canadian labor market was described as "treading water," with the unemployment rate holding steady at 5.5% and a modest increase of 40,000 in employment. However, the population growth rate poses a challenge, as it raises the bar for what is considered a decent monthly job number.

One area of concern is the weaker youth job numbers this year, indicating a need for targeted support. Additionally, sectors such as manufacturing and construction have shown signs of weakness. On the other hand, the professional, scientific, and technical services sector, which had been a leader in job growth, experienced a decline for several months but bounced back in August.

The job market has also witnessed a shift from fully remote work to hybrid work arrangements. Approximately 24% of workers are not working on-site full time, and the share of location-flexible workers in hybrid arrangements has increased from around 25% to over 40%.

While there is some positive news regarding real wages, with wage growth outpacing inflation by 1-2% year over year, it is important to note that wages have not fully recovered from the inflationary period in 2021 and 2022.

Another concerning trend is the decline in Canadian labor productivity for five consecutive quarters. Several factors may contribute to this decline, including economic uncertainty, changes in investment decisions due to interest rate hikes, challenges in getting things done in Canada, and struggles in the natural resources industry.

Alberta's economy, particularly the natural resources sector, has experienced a significant decline, impacting overall Canadian productivity. The decrease in investment in Alberta and the future of the energy industry and energy transition are additional factors to consider.

To address these challenges effectively, it is crucial to quantify the issues facing the natural resources industry and identify the root causes. This will enable policymakers to make informed adjustments and implement targeted policies to support the labor market and enhance productivity.

Canada’s job market is confusing right now. On one hand, unemployment is still near record lows, last month’s job numbers from StatsCan exceeded expectations, and wages are finally starting to increase faster than inflation.  But...  Our population is growing so quickly that we actually added more people in July than the 40,000 jobs that were created, job vacancies are drying up, and compared to the US, our wage growth hasn’t been great at all.  Brendon Bernard is the Senior Economist at Indeed.com, and he’s back on the pod to unpack what's going on in Canada's job market and what it means for workers and businesses. ----- More episodes of Free Lunch by The Peak: https://readthepeak.com/shows/free-lunch Follow Taylor on Twitter: @taylorscollon Follow Sarah on Twitter: @sarahbartnicka Subscribe to The Peak's daily business newsletter: https://readthepeak.com/b/the-peak/subscribe