As more newcomers continue to arrive in Canada looking for work and to start a new life, the economy added an astounding 153,000 jobs to the job market in January.
That surprising surge happened despite predictions that higher interest rates would slow job growth.
According to Statistics Canada’s new labour force survey released on Feb. 10, unemployment was five percent. That is just slightly above the record low of 4.9 percent posted in the summer of 2022.
Blockbuster job growth unexpected
These unexpected January job gains occurred across several sectors of the economy. The sectors gaining the most jobs were wholesale and retail trade which rose by 59,000 jobs.
The healthcare and social assistance sectors of the economy added 40,000 jobs.
By province, Ontario recorded 63,000 more jobs, with Quebec up 47,000 jobs. Alberta was up 21,000 while British Columbia saw an 8,000 hike.
Jobs report is great news for newcomers
As 2022 came to an end, many economists and pundits were predicting that higher borrowing costs would slow economic growth and would curtail employment.
And while some are describing the new job gains as a “blockbuster” and “whopping,” it’s all good news for immigrants.
The Statscan report pointed out that there was “notable” job growth among non-permanent residents (which includes international students and temporary foreign workers). Employment among those who were not born in Canada and have never been a landed immigrant rose by 79,000 (13.3 percent) over the past year.
Immigration is key to a growing economy
Canada’s robust immigration strategy is designed to offset an aging natural population and a low birth rate.
In 2022, Canada welcomed a record-breaking 431,000 new permanent residents mainly from India, the Phillippines and China.
This year, the federal government plans to land 465,000 new immigrants. That number will rise to 485,000 newcomers in 2024 and will jump in 2025 to 500,000 new arrivals.
According to recent statistics, newcomers to Canada are now more likely to be employed than their peers born in Canada. This can be attributed to two major trends: a noted increase in the employment rate of new immigrants that begin in 2016; and the gradual decline in the employment rate of people born in Canada, mostly due to retirement.
These trends are expected to continue long term.
Why Canadians quit their jobs
Statistics Canada has released a new study showing that workers in Canada overwhelmingly quit their jobs for reasons other than being unsatisfied with their job or for being laid off.
The top reasons for quitting a job are going back to school, retiring, having an illness or disability, and personal/family reasons.
The impact of newcomer arrivals on the Canadian economy and housing market is significant.
Newcomers play a central role
Speaking at a Prepare for Canada summit for newcomers, Rebekah Young, Scotiabank’s head of Inclusion and Resilience Economics, said “I think it’s fair to say that there’s a near-universal acknowledgement of the very big and central role that newcomers and immigrants … play in Canada’s economy even before speaking about in society and in broader issues.”
Canada’s popularity as a destination for newcomers continues to grow.
A recently released Gallup poll showed that eight percent 8 percent of the poll’s nearly 127,000 respondents (across 122 countries worldwide) suggested that they would like to immigrate to Canada instead of the United States (U.S).
According to the StatsCan jobs report, the majority of jobs added to the economy were full-time and involved people aged 25 to 54.
Wages grew less than in December
Meanwhile, wages rose 4.5 percent on a year-over-year basis and at a slower pace than inflation. They also grew less quickly than in December.
The labour force survey data shows wage growth peaked at 5.8 percent in November 2022.
Canadian firms looking to hire
Recent data from Robert Half Canada, writes Rolfe, shows that half of the Canadian companies are planning to hire for full-time positions in the first half of 2023. That is an increase from just 40 percent in the second half of last year according to the recruitment company’s survey of nearly 1,450 managers.
Forty-two percent of the managers surveyed plan to hire for vacant positions and 65 percent plan to hire contract professionals in 2023.
According to the survey, nine in 10 managers said they’ve faced challenges finding skilled professionals. Robert Half told The Globe that companies should be prepared to offer competitive salaries and benefits.
Interest rates have little impact on the job market
It also appears that a series of interest rate hikes have had little impact on job growth in Canada.
The Bank of Canada (BoC) has raised its key interest rate eight times since March. It now sits at 4.5 percent which is the highest it has been since 2007.
The BofC has stated that the current tight labour market is an indicator of an overheated economy.
The central bank indicated on January 25 that it plans to hold its key rate for the time being in order to permit higher interest rates to work their way through the economy.
Will there be another rate hike?
The central bank’s strategy involves an easing in the labour market which it believes is a key factor to bring inflation down to its target of two percent.
The bank’s next rate decision is scheduled for March 8.
“The labour market is very tight. It can’t stay this tight,” Bank of Canada Governor Tiff Macklem said recently. “If the labour market stays this tight, we’re not going to get back to 2-per-cent inflation,” which is the bank’s target rate.
Canada’s job growth underestimated
In his jobs report, Holt points out that job growth in Canada has been underestimated “to the tune of 332,000 jobs since October using the initially reported actual job growth estimates and by 274,000 compared to currently revised job growth estimates.”
“The month of January typically sees job declines on a non-seasonally adjusted basis,” said Desormeaux. “But January 2023 reported the fewest job losses in recorded (Canadian) history.”
Talk of a Canadian recession cools
Talk of a recession in 2023 has also started to cool, which is more good news for newcomers looking to come to Canada.
Toronto Star business columnist David Olive observes that it now appears possible that Canada can avoid a recession, “though the odds still favour a brief and mild downturn.”
Olive says investor sentiment turned negative after the invasion of Ukraine by Russia a year ago. Now investor sentiment is swinging from gloom to cautious optimism and negativity is dissipating.
Job diversity gives immigrants options in the job market
Pointing to Canada’s continued strong job growth, Olive observes that “hiring is among the most important of economic signals. Committing to higher payrolls, and the resulting long-term increase in an employer’s cost structure is an expression of confidence in a sustainably robust economy.”
With job opportunities thriving across the country, Scotiabank’s Young says newcomers have a lot of options when deciding where to settle.
“There is a diversification of the Canadian economy and a dispersion of sectors across the country that really offer plenty of opportunities (for newcomers) both across sectors and across the country and across the economic cycle.”