In a year that’s already seen massive employment growth, November delivered the best gains yet.
A surprisingly strong report on Friday showed more Canadians found new jobs than in any month since April, 2012 – driving the unemployment rate to its lowest mark since before the financial crisis rocked the economy last decade.
The Canadian dollar rose by more than a cent against its U.S. counterpart as Statistics Canada released its November labour-force survey results, revealing an unemployment rate of 5.9 per cent, down from 6.3 per cent in October. That’s the lowest since February, 2008, thanks to 79,500 new jobs added last month. Meanwhile, Canada added 390,000 jobs over the 12 months through November – the biggest year-over-year gain since November, 2007.
That growth, up 2.1 per cent, is entirely attributable to 441,400 new full-time jobs, the statistics agency said. For the month of November, it was a rise of 49,900 part-time jobs that drove the stellar gains, though the survey’s month-to-month data tend to be volatile.
The hiring numbers took many economists by surprise. Sal Guatieri, senior economist with Bank of Montreal Capital Markets, called it an “amazing run” and said in an interview that while the pace of job creation is likely to slow next year, the low unemployment rate could hold more surprises.
“We’re kind of in a sweet spot now,” he said. “I don’t believe the unemployment rate is low enough to fuel rampant wage increases that would drive inflation higher and interest rates much higher. But clearly … if the labour market continues to pump out this kind of job growth, we could see wages accelerate through next year.”
Royal Bank of Canada economist Josh Nye described the job growth as reaching the stratosphere – and pointed to November’s average hourly wage growth of 2.8 per cent year-over-year as a sign that could stir Canada’s central bank.
“If that trend holds up, it will be hard for the Bank of Canada to remain on the sidelines much longer,” he wrote in a note. “Our forecast assumes the bank will raise rates again in April when they have more information on NAFTA renegotiation and how households are handling this year’s rate hikes. If anything, today’s blockbuster employment report raises the risk of an earlier move.”
David Rosenberg, chief economist and strategist with Gluskin Sheff + Associates Inc., was much less bullish on the news, dredging up an old adage in a e-mailed note to clients: “If it’s too good to be true, it probably is.”
This kind of job growth, he said, would make sense if the economy were expanding at 4.5 per cent – but Statscan also revealed Friday that real GDP growth had actually slowed to an annualized pace of 1.7 per cent in the third quarter, less than half the rate of the previous two quarters.
“If the employment data are to be viewed as believable, productivity must be taking a real negative hit here,” Mr. Rosenberg wrote. He also warned that November’s month-over-month 1.1-per-cent fall in average hours worked weekly would have the same effect as losing 130,000 jobs – offsetting November’s official gains “by a country mile.”
The demographics that had the greatest job gains in November were women aged 55 or older, youth aged 15 to 24, and “core-aged” men aged 25 to 54. A number of industries helped drive job growth last month, including wholesale and retail trade, manufacturing, educational services, and construction; agricultural jobs, however, took a hit.
Ontario was Canada’s job-gains leader, employing 43,500 more people, boosted largely by manufacturing and wholesale and resale trade; the province’s unemployment rate was 5.5 per cent, its lowest since July, 2000, Statistics Canada said.
With the addition of 16,200 jobs, primarily in manufacturing and construction, Quebec’s unemployment rate fell to 5.4 per cent – the lowest on record since the agency began collecting comparable data in 1976.
Some economists pointed out that a slowdown in hiring is now likely inevitable – “along the lines of 18,000 job gains – not 80,000,” Mr. Guatieri said. “It’s a bit unusual to see an actual acceleration in employment growth while the economy is simmering down.”
With a labour market that’s “pretty much fully employed,” said the Conference Board of Canada’s deputy chief economist Pedro Antunes, “we can’t grow employment at this pace, just because there’s no supply, essentially.”
British Columbia and Prince Edward Island also saw job gains, while other provinces, including Alberta, had little fluctuation. New Brunswick, which has long struggled to keep people working, lost 2,700 jobs last month.