World Economy

Canada Job Market Surges, But Wage Growth Lagging

Construction workers on a site in downtown Toronto.Construction workers on a site in downtown Toronto.

Canada’s economy added a net 55,000 jobs in May, blowing past expectations with a surge in full-time work. Statistics Canada reported Friday the economy added 77,000 full-time jobs, but that was offset by a loss of just over 22,000 part-time positions.

Almost all the new jobs came in the private sector, while self-employment and the public sector were little changed. Economists had been expecting the economy to add about 15,000 jobs during the month, CBC reported.

May’s strong figure means Canada’s economy has added 317,000 jobs in the past year—the strongest 12-month total since February 2013, TD Bank economist Brian DePratto said. “This is a report with a lot to like in it,” he said in a note.

Despite the jobs surge, the unemployment rate ticked up to 6.6%, as more than 78,000 people entered the job market looking for work during the month.

“Even the modest uptick in the unemployment rate is a welcome development as it reflected a labor market that drew Canadians back in,” DePratto said, noting that the participation rate among the core working age population is now near record highs.

The manufacturing sector added 25,000 new jobs, its best month since 2002. The finance, insurance and real estate sector lost 17,000. Health care added about 15,000 jobs, while the information, culture and recreation sector lost about the same amount.

Almost all of the new jobs came in three provinces: Ontario, British Columbia and Quebec, which collectively added 47,000 new jobs. Every province added jobs, but the others didn’t add very many.

If there was a soft spot in the report, it was in terms of wages, which have risen by about 1% in the past 12 months, Statistics Canada said. That’s higher than last month’s record low of 0.7%, but it’s still below the inflation rate—which means despite the new jobs, workers are actually worse off in terms of their buying power than they were a year ago.

The growth in wages is “still soft”, Bank of Montreal economist Benjamin Reitzes said, “but given the persistent strength in employment, look for wage gains to improve through the second half of 2017.”

Economist Frances Donald at Manulife told CBC News in an interview that economists like to see wages increase “so that Canadians can continue to spend what they’ve been spending and potentially spend more.”

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