The unemployment rate has fallen from 5.2% to 5.1% in the past month, hitting another record-low, for the third consecutive month, since data became available in 1976.
More businesses are rushing to match consumer demand, prompting a sudden need to hire new and maintain current workers. According to Statistics Canada, the number of unfilled positions remains extraordinarily high as the Canadian labour force gained another 40,000 jobs in May.
More than 135,000 people also found full-time work in the same month, with women workers leading across all age groups. These results are a strong bounce back from when Canada cut three million jobs at the start of the pandemic. In fact, the May statistics show there are now more than half a million workers than Canada had before the pandemic.
“As we commence the ritual of filling patios and hit the road for overdue vacations, employers continue to search for workers to meet heightened demand,” James Orlando, an economist at TD Bank, said in a commentary. “This has job vacancy rates at record levels, making it clear that the Canadian economy is operating beyond full employment.”
The services sector saw the most gains with 81,000 jobs, while the finance, insurance, and real estate sectors lost 19,000 jobs for the month.
Aside from job vacancies, the rise in wages is also the main driver of falling unemployment rates. The average hourly wage rose 3.9% to $31.12 an hour in the past year. However impressive, the wage increase still falls short of the official inflation rate of 6.8% – the fastest YOY rise in 31 years.
It’s unprecedented for workers to possess this much leverage in the labour market, but central bankers are also worried about its long-term economic impacts that could worsen inflation.
“It is an unwelcome sign for the Bank of Canada as higher wages push up consumer demand and thus inflation,” Jay Zhao-Murray, an analyst at Monex, told CBC News. “A tight labour market where workers have more bargaining power points to yet higher wage growth down the line. Without some slowing in wage growth, central bankers will continue to worry that the hot labour market is making their job of bringing inflation back down even harder.”
Economist Sean Adams echoed a similar sentiment: “That’s good news for job seekers but could make it increasingly difficult for businesses to find staffing. In other words, current labour shortages might only get worse.”
