Canadian unemployment fell and job vacancies are rising, creating a tighter labor market. Statistics Canada (Stat Can) payroll data shows job vacancies were climbing in December. At the same time, the unemployment rate has dropped to pre-pandemic levels. A tight labor market is usually good for wages, but that isn’t the case this time. The national statistics agency found average salaries moved very little last month. Unlike the US, Canada’s tightening labor market is producing very little wage growth.
Canadian Job Vacancies Climb To Nearly 900,000
Canadian job vacancies are climbing as hundreds of thousands of jobs remain unfilled. There were 896,140 job vacancies in December, up 2.5% (21,445) from the month before. It increased 87.9% (419,280) compared to December 2021. The climb is huge, especially for the size of the country’s economy.
Canadian Job Vacancies
The monthly number of unfilled jobs in Canada.
Source: Statistics Canada; Better Dwelling.
In December, the job vacancy rate climbed to 5.2% of total payroll jobs. It increased 0.1 points from a month before, and 2.2 points higher than a year earlier. Not quite at the high since they began tracking in 2020, but higher than anything seen before July 2021. It’s a huge number of jobs, especially considering the unemployment rate.
Canadian Unemployment Is Falling, Tightening Labor Supply
All of this is happening against a backdrop of a falling unemployment rate. The seasonally adjusted unemployment rate fell to 5.4% in December. It was the lowest rate since December 2019, meaning Canada is back to the “before time”. That’s with service and travel industries having a long way to go, so there are plenty of jobs kicking around. Bad news for employers, but in theory it’s great news for employees looking for work.
Canada’s Tight Labor Market Has Resulted In Minimal Wage Growth
Tight labor markets usually mean wages rise to compete for labor, but that isn’t happening. Stat Can said the average weekly salary reached $1,135 in December. It was virtually unchanged from a month before, and up just 1.7% from a year before. The agency notes there was little change to workplace compensation.
This means there’s little excuse for the paltry wage growth. CPI was reported at 4.8% in December, and climbed substantially shortly after. Despite a tightening labor market, average real wage growth is actually falling.
Both Canadian and American economies are seeing similar labor market conditions. Rising job vacancies, falling unemployment, and elevated inflation. However, the details are a little different once you dive into them. The tight labor market in the US is producing huge wage growth, driving inflation. Canada’s tight labor market is showing little impact on wages, but still a lot of inflation.