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Economic News

Canada: Despite a Surprise Jobs Spike, the Labour Market Continues to Rebalance

May 10, 2024
Marc Desormeaux
Principal Economist


  • Net total Canadian employment increased by 90k in April 2024, a much stronger-than-consensus print following last month’s unexpected decline. The unemployment rate was unchanged at 6.1%, having trended upward since mid-2022. Table 1 summarizes key data points.
  • This first data point of the second quarter slightly increased our Q2 2024 tracking of real annualized Canadian GDP growth to near 1.5%. Although that’s in line with the last Bank of Canada (BoC) estimate published in April, we’re still tracking an advance near 2% for Q1, which is below the latest BoC projection.


We often say that one month does make a trend, and today’s unexpected spike in employment emphasizes that point following the decline recorded in the prior month. Other details of today’s report were also positive. Full-time positions drove about half of the headline increase, private sector hiring jumped following several months of underwhelming results and the year-over-year rate of increase in hours worked accelerated versus March. Of course, these positive results also represent just one month of data, but their sheer strength easily offset the job losses recorded in the previous month, likely putting an end to talk that March would be a major turning point for Canada’s labour market.

From an inflation control perspective, further easing of wage gains is optimistic (graph 1). The BoC analyzes trends in permanent employees’ wages to assess the risk of wage-push inflation. That said, wage growth may not yet be compatible with the 2% inflation target as the central bank highlighted External link. in April.

Despite the jump in jobs this month, the labour market is loosening because the pace of employment growth has been so significantly outpaced by population gains for the better part of the last year (graph 2). The rate of Canada’s headcount increase stayed above 3% annualized for another record year-over-year gain.

Of course, decades-high headcount advances remain a tailwind for economic growth and possibly inflation, but this risk may be diminishing as well. Job vacancies are easing, lowering the potential for upward pressure on wages. And Ottawa’s plan to lower the temporary resident population External link. by 20% should reduce the primary driver of recent demographic gains as we progress through 2024.

We remain of the view that the BoC will begin reducing its policy rate in in June. Price pressures are easing, the labour market is loosening, and growth is so far coming in below the most recent Bank of Canada’s projections (with the economy contracting in per capita terms External link.). We think these indicators should prompt the central bank to adopt a less restrictive monetary policy stance at its next meeting, though the April 2024 inflation data set for release in two weeks will be key to solidifying that call.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.