In the month of July, employment in the sector that provides services decreased by 53,000 (-0.3%). The largest portion of losses in this industry came from wholesale and retail trading. The number of individuals employed in the wholesale and retail sectors decreased by 27,000 (-0.9%) in July, marking the second consecutive monthly reduction. The provinces of Ontario and Quebec accounted for the bulk of the net drop.
According to Andrew Grantham of CIBC, “Job losses were oddly concentrated in the services sector, particularly wholesale and retail, education and health.” “With some of those industries reporting significant vacancy rates, labor availability seems to be the main problem rather than demand. However, the main distinction between this report and the one from last month is the unanticipated slowdown in pay growth.
On a year-over-year basis, average employee hourly salaries increased by 5.2 percent (+$1.55 to $31.14) in July, almost matching the rate of growth recorded in June (+5.2 percent; +$1.54). For the second consecutive month, part-time workers’ hourly pay (+5.0%; +$1.05) and full-time workers (+4.9%; +$1.52) increased at the same rate. Early in 2022, full-time employees’ wages grew more quickly than part-time employees’ wages. The Consumer Price Index increased 8.1 percent on a year-over-year basis in June, the highest yearly change in almost 40 years, according to the most recent data on inflation.
According to economist Liam Daly, the Conference Board of Canada media release stated that “the growing cost of living is raising the temperature at the collective bargaining table.” “Unions claim that regular yearly salary increases are simply insufficient given the pace of inflation. Workers are negotiating from a stronger position due to high vacancy rates and low unemployment rates.
The primary conclusion, according to BMO economist Doug Porter, is that the job market is still extremely tight.
We continue to have the lowest unemployment rate in at least 50 years and solid pay growth, according to Porter. However, from a growth perspective, the truth is that firms are having problems hiring workers, which restrains economic growth.