An unexpected jobs surge

Like an unscheduled meeting with your boss or a wedding invite from an ex, Stats Canada’s latest labour report is one of those surprises that you’re not quite sure what to make of.

What happened: Canada added 150,000 jobs in January, obliterating analyst expectations which projected a measly gain of only 15,000 jobs. The country’s labour market has now added jobs for five straight months as unemployment remains at a near-record low of 5%.

  • The US also reported surprisingly robust job gains last week, adding 517,000 jobs instead of an expected 187,000, as unemployment levels fell to 54-year lows.

Why it matters: These bonkers job numbers are something of a mixed bag. 

On one hand, the immense gains are easing concerns over Canada being on the verge of a recession, which some economists feared (fairly recently) could happen in early 2023.  

On the other, a hot job market raises concerns about persistent inflation. Wage increases may have cooled slightly, but they have still jumped 4.5% compared to January 2022.

  • “If the labour market stays this tight, we’re not going to get back to 2% inflation,” Bank of Canada (BoC) governor Tiff Macklem said this week.
  • He added that continued wage growth of 4-5% also isn’t consistent with getting inflation back to the 2% target. Big yikes. 

Bottom line: The BoC promised to cool it on the rate hikes, but now experts aren’t so sure they can. Scotibank’s head of capital markets economics told The Globe“If we keep getting data that is even remotely like this, then don’t rule out… another hike as soon as April.”