As the Canadian economy continues to recover from the pandemic, new data released on Friday reveals that unemployment fell slightly to 5.7 per cent in January 2023, with an additional 37,000 jobs added. The figures were better than expected by economists, but mostly driven by an increase in part-time work. Despite this, wages for workers have been growing rapidly as they seek compensation for inflation.
BMO chief economist Douglas Porter and CIBC senior economist Andrew Grantham both noted the positive aspects of the job market in their respective reports. Porter wrote that while a decent job gain and persistent five per cent wage growth are not urgent reasons to cut interest rates, it is clear that Canada’s economy is moving in the right direction. Similarly, Grantham noted that today’s data suggest that the Bank won’t be in a rush to cut interest rates and maintained his expectation for a first interest rate cut in June.
Employment rose across several sectors in January 2023, led by wholesale and retail trade, as well as finance, insurance, real estate, rental and leasing. However, accommodation and food services saw the largest employment decline. Despite high interest rates last year causing unemployment to trend upward from 5.1 per cent in April to 5.8 per cent in December 2022