Canada is entering a new phase of strong demand for workers.
The Canadian economy lost 43,000 jobs in June but the unemployment rate fell.
The photo was taken by the radio station.
In June, Canada's labour market cooled a bit. It is only historically hot right now. You need to know what to look for.
Once the big brains at the Bank of Canada and elsewhere get the current inflationary episode figured out, they probably will think about a new definition of full employment.
Prior to the Great Recession, a number of six per cent was thought to be as low as Canada's unemployment rate could go before the economy could handle more hiring.
The unemployment rate in June was higher than in May.
Since the end of the year, the rate has been below six per cent and had settled at around five per cent before the COVID crisis. It is safe to assume that economists will conclude that 4.9 per cent is more than Canada's relatively productive suppliers of goods and services can handle. Canada feels like it has entered a new phase as technological disruption and a decreasing number of older workers combine to create strong demand for workers.
In June, employment fell by about 43,000 positions. The unemployment rate fell because fewer people were looking for jobs.
The headline number is usually that. Wage growth is the most important indicator of labour force survey. The central bank is keeping a close eye on wages to make sure that inflationary pressures are not concentrated in prices for goods. The Bank of Canada will see that as evidence that expectations of entrenched inflation are taking root if wages are too fast. There is only one way to break the psychology of central bankers.
The year-over-year increase in average hourly wages was less than in May. It is high by recent historical standards. Individuals getting the raises probably are happy, but Bank of Canada Tiff Macklem probably will be fretting about that number as he considers what to do with interest rates.
The hiring boom may have ended. It was the first decline since the start of the Pandemic that was not associated with COVID restrictions. It's hard to imagine the unemployment rate going down. Our desire to spend is making it hard for us to provide goods and services. The Bank of Canada has little choice but to curb demand, even if that means triggering a recession, since there is no easy way to increase supply of labour.
The email address is kcarmichael@postmedia.
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