The job market is showing signs of slowing in Canada, but not in Quebec, where more jobs have been created than in the rest of the country in November, and where the unemployment rate fell to an all-time low of 3.8%. Businesses in Park-Extension and all over Montreal are struggling to find labor as the Quebec economy created 28,000 jobs last month, an increase concentrated in the Montreal metropolitan area, which has 25,000 more jobs. The unemployment rate remained unchanged at 4.2% in the Montreal region and settled at 2.7% in Sherbrooke, the lowest rate in Quebec.
The resilience of the labor market continues to surprise economists, who have been expecting for several months that inflation and successive increases in interest rates will result in a rise in the unemployment rate.
Wages continue to rise
According to Statistics Canada, the average hourly wage continued to rise in November, reaching $32.11. This is 5.6% more than in November 2021.
In Quebec, wages are increasing even faster than in the rest of Canada, a sign that the job market is tighter. According to the Institut du Québec, the average hourly wage is growing at an annual rate of nearly 6% in Quebec. Wage growth therefore follows more closely the increase in prices measured by the Consumer Price Index for Quebec, which was 6.4% in October.
Full employment and lack of manpower
Quebec is in a situation of full employment, with an unemployment rate of 3.8%, but this is not a cause for celebration for businesses, according to the Chairman of the Council of employers, Karl Blackburn. “The economic vigor is there, but the challenge remains the labor shortage,”
There are nearly 250,000 vacant positions in Quebec, he points out, which translates into a deficit of services in the public sector and economic losses in the private sector.
Interest rate: 25 or 50 points?
The picture of employment and an economy that is still growing at an annual rate of 2.9% in the third quarter complicates the task of the Bank of Canada, which is counting on a slowdown to quell inflation.
The next key rate hike, on December 7, could well be 50 basis points rather than 25 points, given these latest developments. After six increases since the start of the year, the key rate is currently 3.75%.
“We wouldn’t be surprised if the central bank waits until January before reducing the pace of rate hikes to 25 points,” says Laurentian Bank’s chief economist, Sébastien Lavoie.
