In January 2023, Canada experienced a slight decline in unemployment to 5.7%, with the addition of 37,000 jobs. Despite this positive news, the increase in employment was primarily driven by part-time work, with 12,000 full-time jobs lost.
Wages for Canadian workers have been growing rapidly in response to inflation, with a 5.3% increase from the previous year. According to BMO chief economist Douglas Porter, the job gain, drop in the jobless rate, and consistent wage growth do not warrant an urgent call for rate cuts. Similarly, CIBC senior economist Andrew Grantham believes that the data suggests that the Bank will not rush to cut interest rates and expects a first rate cut in June.
The wholesale and retail trade industry as well as finance, insurance, real estate rental and leasing sectors experienced increased employment in January. On the other hand accommodation and food services saw the largest employment decline. Canada’s unemployment rate had been trending upward from 5.1% in April to 5.8% in December in 2022 and similar trends are expected to continue in the future.