Canada employment forecast: Forecasts from five big banks, labor market continues to weaken

Canadian employment data for January will be released by Statistics Canada on Friday, February 9 at 1:30 p.m. GMT. As we approach release time, here are the forecasts from economists and researchers at five big banks for the upcoming employment numbers.

The North American economy is expected to have added 15,000 jobs compared to 0.1,000 in December, while the unemployment rate would increase one point to 5.9%.

TDS

We expect employment to increase by 30,000 people in January, slightly above the recent trend, although this will not be enough to prevent the unemployment rate from rising 0.1% to 5.9%. This reflects a recent pick-up in hiring intentions, while further growth momentum later in the year will also provide a boost to employment growth, although we see limited scope for lower wage growth (0.1% to 5.6%).

NBF

Job creation may have remained tepid in January (+10,000), reflecting an economy operating below its potential. This modest gain, combined with another significant expansion of the labor force and an unchanged participation rate (65.5%), should translate into an increase of two tenths of the unemployment rate, to 6.0%.

RBC Economics

We expect the Canadian unemployment rate to reach 5.9% in January, up almost one percentage point from 5% a year ago. That's the highest rate since the pandemic hit in January 2022. We expect another 10,000 jobs to be added since December, but not fast enough to maintain the country's record pace of population growth.

Citi

After virtually zero job growth in December, we expect employment to increase by 40,000 jobs to start the year in January. This would be stronger than the trend of recent months and stronger than a typical pre-pandemic pace of around ~25,000/month. But with population growth substantially higher and the labor force participation rate expected to rebound to 65.6% after December's decline, an employment increase of 40,000 would still mean the unemployment rate would rise to 5.9. %. Salaries will be one of the most important factors to monitor. After a big jump to 5.7% year-on-year in December, we expect average hourly wages to fall to 5.3% year-on-year in January.

CIBC

The Canadian labor market likely weakened in January, with a modest gain of 10,000 jobs bringing the unemployment rate to 5.9%. This would reflect a deterioration in domestic demand, with consumers more cautious about spending as mortgages are renewed, and the increase in business insolvencies that herald layoffs in some sectors. Hours worked could have picked up, but this is probably a one-off effect due to the end of public sector strikes in Quebec. The strong monthly wage growth in the previous year has not been taken into account in the annual calculation, so wage growth for permanent employees may have slowed slightly, but would still remain above 5.0% year-on-year .