Skip to main content

The country’s average hourly rate for permanent employees increased by 1.9 per cent to $27.75 from October of last year.

Christopher Katsarov/Globe and Mail

Despite signs suggesting Canada’s labour market is robust, wage growth continued to slow last month.

Canada added more than 11,000 new jobs in October, the unemployment rate reverted to a multiyear low of 5.8 per cent and businesses have repeatedly said they cannot find staff.

And yet, wage growth declined for the fifth consecutive period, according to Statistics Canada’s Labour Force Survey (LFS) released on Friday.

Story continues below advertisement

The country’s average hourly rate for permanent employees increased by 1.9 per cent to $27.75 from October of last year. That was weaker than September’s year-over-year wage growth of 2.2 per cent.

The decline is occurring over a period of fairly healthy job creation and as the major labour markets of Ontario and British Columbia hiked their minimum wage.

“It is a bit of a conundrum,” said Craig Alexander, chief economist with Deloitte Canada. “This is not one monthly number. This has been a trend since May.” In May, average hourly earnings increased by 3.9 per cent. In June, growth was 3.5 per cent, July was 3 per cent and August was 2.6 per cent.

Although the LFS is often derided for its inconsistencies and volatility, Mr. Alexander said that after five consecutive months, “something real is taking place.”

A number of factors could be holding wages down, such as increased competition from technology and other countries. Also, there could be more people available to work, including retirement-age baby boomers who remain in the work force.

“One possibility is that the labour market is not as tight as the low unemployment rate suggests,” Mr. Alexander said. Baby boomers “that are leaving the labour force are a pool of workers that can be attracted back in if there was an adequate market demand for them,” he said.

Although the Bank of Canada places very little weight on the LFS’s earnings data, the central bank’s own wage measurement is also close to 2 per cent.

Story continues below advertisement

Called wage-common, the Bank of Canada’s measurement has remained at 2.3 per cent for the first half of this year and most of last year. That is below the 3-per-cent level that the central bank has said was historically consistent with a tight labour market.

“That is still disappointing relative to where we should be at this point in the cycle,” said Josh Nye, economist with Royal Bank of Canada. “It’s certainly true that we haven’t seen the pick up in wages that we would be looking for given how low unemployment is and how strong the job market is.”

Wage-common is calculated quarterly from the LFS, employer payrolls and two economic reports. The LFS is a tiny component.

The slowdown occurred even as Ontario’s average hourly rate expanded by 3 per cent from a year ago. The province is the country’s largest labour market.

Other provinces recorded weak wage growth. British Columbia, one of the country’s strongest regional economies, was up 1.6 per cent from October of last year. Alberta, which also hiked the minimum wage, was up by 1.8 per cent and Quebec grew by 0.3 per cent.

The weakness has tamped down expectations that the Bank of Canada would raise its benchmark interest rate later this year. “The softness in the wage data in October points to January as the most likely month for the next rate increase,” Bank of America said in a research note.

Story continues below advertisement

Over all, the economy gained 11,200 net new jobs last month, with full-time positions offsetting part-time losses. Over the year, employment increased by 206,000 positions, or 1.1 per cent, with the majority of the new jobs full time.

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter