By Jock Finlayson, ICBA Chief Economist

While most incoming data over the past couple of months suggest the Canadian economy has stalled, the latest Labour Force Survey from Statistics Canada paints a more flattering picture.

The national economy added 64,000 jobs in September, on the heels of a more modest increase in August (note: these figures are seasonally adjusted). The unemployment rate remains unchanged, at 5.5%. A significant jump in employment normally translates into a lower unemployment rate. But Canada’s population and labour force are expanding briskly, fueled by record levels of in-migration – including of temporary immigrants looking for (and mostly finding) work. This trend is contributing to the growth of the workforce and preventing a further drop in the unemployment rate.

A closer look at the Labour Force Survey (LFS) yields a cautious assessment that generally aligns with other data signaling the flatlining of the Canadian economy.

First, part-time positions accounted for three-quarters of the job growth in September, with full-time employment up just 15,800. Moreover, total hours worked actually declined slightly from the month before.

Second, the education sector added a striking 66,000 positions last month, which is greater than the aggregate national job increase of 64,000; this reflects the “return to school” effect typically seen in September.

Finally, several major Canadian industries are now shedding workers, with employment in September down by roughly 20,000 in finance and real estate services, 18,000 in construction, 12,000 in information and related services, and 11,000 in retail and wholesale trade.

Focus on B.C. and Alberta

Turning to the two Western provinces where ICBA members do business, British Columbia posted a surprising 25,700 job gain in September; on a year-over-year basis, employment growth in the province is now running at 1.7%. In contrast to Canada as a whole, most of last month’s job growth consisted of full-time positions.

But the strength of B.C.’s labour market continues to be underpinned by a steadily growing public sector workforce (defined as public administration across all levels of government plus most of health care, education, and social services). As of September 2023, the number of payroll jobs in the B.C. private sector was still some 15,000 below the average for 2022 (see Table 1). Moreover, and arguably of greater significance, private sector payroll employment is only a smidgeon higher than it was back in 2019, before the onset of the COVID-19 pandemic. In other words, the overall B.C. business sector has barely added any jobs in the past four years – a troubling pattern, to say the least, and one that differentiates B.C. from the other large provinces. The lack of new private sector jobs points to an underlying fragility in the labour market outside of the burgeoning public sector.

  Table 1: B.C. Employment by Class of Worker (000)*
                                                Private sector payroll employment    Public sector employment
September 2023                     1,769                                                   582
2022 average                          1,783                                                   540
2019 average                          1,756                                                   465

*BC Stats

As for Alberta, according to the latest LFS the province suffered a substantial 38,700 drop in September, the biggest monthly decline since the spring of 2020. Yet there was no change in the unemployment rate, and wage increases for permanent Alberta workers accelerated to 6.2% y/y, the strongest pace in the country. In addition, over the first three quarters of 2023 employment in Alberta is up 3.4% vs the same period last year. These findings hint that September’s top-line job losses may be less than the initial estimate from Statistics Canada. We will await the October and November LFS results before revisiting our current view that Alberta is on track to be one of the top provinces in economic growth over 2023-24.

Eye on Construction

As noted above, construction employment decreased by 18,000 in Canada last month, partially offsetting an increase of 34,000 positions in August. Since January 2023, employment in the Canadian construction sector has fallen by 55,000 (-3.4%). Higher interest rates are certainly part of the explanation, as escalating borrowing costs have dampened residential construction and are also weighing on new project development in the commercial and industrial sectors.

On a seasonally adjusted basis, B.C. added 12,600 construction jobs in September, but the sector has shed 17,700 positions in the last 12 months. Alberta saw the disappearance of almost 18,000 construction jobs last month, with employment in the sector now down by 5,600 compared to a year ago. ATB Economics was surprised by this, noting that “residential construction activity picked up over the summer… and the construction industry continues to report the highest job vacancy rate” of any Alberta industry.

Sector-specific labour market data for individual provinces are often volatile on a month-to-month basis. To gauge the true strength of labour demand in the largest industries at the provincial level, it is best to focus on three- or six-month time periods. We will do this in future ICBA Economics posts.

Table 2: Construction Employment (000, Seasonally Adjusted)*
                                    September 2023         August 2023    % Change from September 2022
Canada                        1,556                           1,574                           +0.7%
B.C.                              222.9                           210.3                           -17.7%
Alberta                        230.6                           249.3                           -5.6%

*September 2023 Labour Force Survey.