Strong jobs gain last month hides signs of weakening labour market, economists say

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Unemployment rate holds steady at 5.5%.

OTTAWA — The Canadian economy added more jobs than expected last month, but with the gains driven by a seasonal spike in education employment and an increase in part-time work, economists say the job market is weaker than it looks.“While the headline figures will be grabbing most of the attention, we’d caution on getting too excited. Almost all the gains were in the historically volatile education sector,” said TD director of economics James Orlando in a client note.

Canada’s labour market has cooled over the last year as interest rates have risen: job vacancies have fallen and the unemployment rate has edged up.“Around a year ago, I would say that conventional wisdom turned to the view that the economy was going to go through at least a mild downturn, if not something a bit more serious than that. And I would say overall, things have held up better than expected,” said Douglas Porter, BMO’s chief economist.

The Bank of Canada has been keeping an eye on the labour market to gauge whether the economy is cooling enough to bring inflation back to its two per cent target.

 

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