By Jock Finlayson, ICBA Chief Economist

Signs are multiplying that the once red-hot Canadian job market is cooling, fast.

The unemployment rate has been creeping higher over the last year or so as steep interest rate hikes implemented over the course of 2022-23 increasingly take a toll on consumer spending, investment and housing market activity. Relatedly, the number of job vacancies per unemployed person has been trending lower.

Data on “job vacancies” – defined as the number of job openings as a share the total labour force — confirm the story of a softening job market. As Statistics Canada recently noted: “Job vacancies fell by 24,300 (-3.6% q/q) in the first quarter, marking the seventh consecutive quarterly decline” from the record high vacancy count registered in the second quarter of 2022. Measured relative to the unemployment rate, job vacancies are also dwindling, with two unemployed persons for every job vacancy in the country in Q1. Meanwhile, the number of payroll jobs in Canada stalled in the first three months of 2024, providing more evidence of an essentially moribund national economy.

Among broad occupational groupings, vacancies fell in areas most relevant to the construction industry – trades, transport and equipment operators (-5.8% in Q1 on a quarter-to-quarter basis)). Vacancies in this category peaked at 195,000 in the second quarter of 2022. Year-over-year, vacancies in trades, transport and equipment occupations are down by 25.6%.

Among industries, the job vacancy rate in Q1 stood at 4.2% in the Canadian construction sector, down from a peak of 7.1% in the second quarter of 2022.

The provinces of B.C. and Alberta have experienced the same trend toward fewer vacancies as Canada as a whole.

In B.C., the average all-industry job vacancy rate peaked at 6.8% in mid-2022 and fell to 4.0% in the latest reading (Q1 2024; not seasonally adjusted). Within the construction sector, the vacancy rate dropped from 10.6% to 5.8% over the same period. It is worth noting that construction continues to experience a higher vacancy rate than the overall B.C. economy.

Alberta’s economy-wide job vacancy rate was 3.4% in Q1, significantly lower than in mid-2022. In construction, as in B.C. the vacancy rate in Alberta is higher: 5.3% in Q1, although that is materially lower than the record 7.4% posted in the second quarter of 2022.

The data for B.C. and Alberta indicate that the construction industry continues to face above-average challenges in filling vacant positions and sourcing an adequate supply of qualified labour.