Canada’s last job report didn’t have a frenzy of good news, but there was one highlight—wage growth. That was the take from BMO Capital Markets, who wrote to investors this morning about the substantial wage growth in February. Even with inflation set to rise and erode some of that growth, workers saw their weekly pay rise much faster than usual.
Canadian Wages Are Still Showing Strong Growth
Canadian wages showed surprising growth despite a slowing economy and trade war threats. “The February employment result was a damp squib in Canada, with jobs about flat and aggregate hours worked [last month] falling heavily,” explains Douglas Porter, chief economist at BMO Capital Markets.
The banks found the one major highlight in the latest job report—wages. According to its calculations, average hourly wages climbed 3.8% from last year, while total annual growth of aggregate hours worked moved 0.5% higher. Overall, this works out to overall pay rising 4.3% above last year. That’s a substantial income bump.
Even After Inflation, Canadian Wages Are Growing Faster Than Usual
Those gains will be tempered by the return of inflation from its holiday. CPI has been temporarily suppressed due to the GST/HST holiday from mid-December to mid-February. Starting with the February report, the temporary relief will be reintroduced and experts see the data climbing fairly aggressively. Even so, workers are expected to see their wages outpace typical growth.
“We don’t have the February CPI yet, but the initial read would peg it in the low-to-mid 2% range. That would still leave this income proxy running about 2 ppts above inflation. For context, the average increase in the decade before the pandemic was roughly 1.5% per year,” notes Porter.
In other words, this is an improvement over pre-pandemic times when things were considered “normal.” Great news for those with a job.
Those thinking of celebrating may want to hold back some of that enthusiasm. It’s worth noting that the average wage growth is subject to an issue known as survivorship bias. The data is exclusively a sample of those who continue to have jobs and discounts other factors.
In this case, the recent uptick in unemployment and the rise of workforce “non-participants” are discounted. A collapse of lower-wage growth jobs can skew the data toward the higher end of growth. This would undermine the reality of other trends that indicate slower wage growth is approaching, such as the falling job vacancy rate.
What logic says that an increase below the rate of inflation is “substantial”?If we were to trust the CPI numbers wages would have kept up with inflation…….Who’s lying?How about average wage compared to civilized countries? I think we are compared to Mississippi so………Again,who’s lying, couldn’t be the banks gracious noooooo.lol
I think you might have read that wrong, amigo. Real wage growth is 1.8% (post-inflation), and nominal (unadjusted) growth is 3.8%.
Good in the context of 1.5% being the average prior to 2020, but still abysmal in terms of the cost of living. Especially for those kids that don’t already own a home.
Fair enough
Just tired of being pandered to by the bankers that ruined the housing market, made Canada a heaven for foreign money laundering and I suppose this is not the place to do it,but where else?Thank you for your excellent reporting,we need it.
Important hedge to understand on the data—Middle Class people are unlikely to have seen this much growth.
Federal Minimum Wage increased 3.9%, so if the average person saw 3.8% they made less of an increase. I mean if you’re making minimum you most likely need the wage hike more than the average person, but it seems important to understand most union gigs are pushing just over 2%— not even close to 4%.
How much “seasonal adjusting” did Stats Can’t do last month?
Amen. Having to buy a home when income growth is 1/3 of the acceptable increase of home prices. It’s a ponzi scheme.
Bank of Canada must cut rates NOW and must do it fast to support house prices.
Canada’s economy depends on higher house prices and must be strong. Lowering interest rates will stimulate housing and increase prices and in turn everyone will be richer.
The formula used for the chart in this article on an increase in wages, with the changes in immigration for student that were restricted in hour that they could work! It’s been said 100,000 of thousand have left the work forces across Canada from low wage part time workers, and been replace with full time workers at a higher Rate, with the same hours! What I’m thinking if 3 part time worker is replace by 1 full time worker would this not show as an increase in wages! But what doing know need your input! Thank you enjoy your day!
Price of electricity per kWh went from 12 cents to 16 cents. They lie about inflation just like they lie about wages. The average canadian that works makes $50k just like 10 years ago.