The beginning of 2017 appeared to be great for the Canadian labor market, whereas Canada’s workers are given more jobs in January. However, that still has not led to the increase in wages.
The statistics, which was published on Friday showed that, after all, the Canadian labor market starts creating jobs, yet there are few signs that the wages are going to rise anytime soon. That can be caused by the fact that the number of working hours has been decreased and the growth of wages has been sluggish. This surprising puzzle overshadowed the excitement over the report, which indicated 48,300 workplaces to be added in the first year of 2017. That displays an increase of more than 2000 workplaces, in comparison to the number of 46,100 workplaces that were added back in December 2016.
The chief economist of the capital markets department at the Bank of Nova Scotia Derek Holt told via a phone call that “there is definitely an impetus in the Canadian labor market. Yet, it is reasonable to remain skeptical about the longevity of the ongoing trend, since the labor market has not completely recovered from the 2008 Global Financial Crisis.”
The Canadian labor market added more than 48,000 workplaces in the first month of 2017
The agency of statistics, based in Ottawa, the capital of Canada, reported that the rate of unemployment fell by one tenth up percentage points to 6.8 percent. Economists and analysts pointed out that this is an ongoing trend that started in the second quarter of 2016. Considering that the second quarter of 2016 has been the best period for the labor market since 2010, the country can boast the highest pace of hiring for almost a decade.
Nevertheless, the data of wage growth shows that there are underlying weak points that make the matters worse for the policymakers at the Bank of Canada. Average hourly wages of employees with permanent employment – the most common type of contract for hiring employees in Canada – rose only by 0.1% annually, from January 2016 up to January 2017. That is the lowest pace of wage growth for more than a decade and a half. At the same time, the working hours of permanent employees fell by 0.8 on the annual basis, resulting in the stagnation of wages and lack of increase in the purchasing power of domestic consumers.
Mark Chandler, a chief economist at the RBC Market Capitals, an investment bank based in Toronto, pointed out that “wages are still on the way of softening. Indeed, the increase of workplaces in the labor market itself is alright, but it does not show any signs of the labor market becoming any tighter.”
The Canadian national currency reacted adequately to the positive news, as it was strengthened by 0.5 percent in the next morning, following the publication of the data. Yields on the two-year government bonds also rose to 0.75 percent, 3 points higher from the previous indicator.
The majority of the workplaces have been added in the sector of services, with 20,500 jobs to be added in real estate, leasing, insurance, and finance. A large share of the jobs that have been created, however, were part-time ones: 32,400 part-time and 15,800 full-time workplaces have been generated.