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Bank of Canada Governor Tiff Macklem takes part in a news conference in Ottawa, on Oct. 26.PATRICK DOYLE/Reuters

Last Friday’s employment report from Statistics Canada may have looked like a yawner to the casual observer, but for Bank of Canada Governor Tiff Macklem, the details were far from ho-hum.

Sure, the 10,000-job blip in employment growth last month is effectively a rounding error in Statscan’s monthly labour force survey. But the broader trends emerging from the labour data are pivotal to the central bank’s charting of the future course of interest rates. Mr. Macklem has made it clear that he sees restoring the labour market to balance – bringing demand for workers more in line with supply – as central to the bank’s goal of returning inflation to its 2-per-cent target.

As Mr. Macklem and his colleagues deliberate over Wednesday’s interest-rate decision – widely seen as a choice between another oversized, half-point hike and a smaller, quarter-point increase – some key details in the employment data will demand their attention.

Many of those numbers point to a substantial slowing of the labour market. But one notable figure continues to send warnings about inflation pressures.

Job growth has stalled for months

In the past six months, employment has risen by a paltry 26,000 jobs, or just 0.1 per cent. It’s a profound slowdown from the six months prior to that, during which the economy added more than 340,000 jobs; in the six months before that, it grew by more than 700,000 jobs.

Consider that during the past six months, Canada’s working-age population (defined by Statscan as 15-plus) increased by almost 260,000. The only thing that has kept unemployment from rising is a dip in the participation rate (the percentage of adults either working or seeking work), which has fallen to 64.8 per cent from 65.3 per cent six months ago.

Fewer hours worked

In the first year of the pandemic, the central bank and other economic analysts turned to hours worked as a critical signal of how well (or poorly) the labour market was holding up. It proved to be a more useful gauge than simply counting jobs as it indicated how much labour was actually being put to use.

Now, those hours-worked statistics indicate an economy that is using significantly less labour, even if employment hasn’t slipped (yet).

Total hours worked by all workers are down almost 7 per cent from their peak in June. On average, that works out to almost two hours less a week for each worker.

The private sector is the only one hiring

Private-sector employers have added about 100,000 employees in the past six months – a slowdown, unquestionably, but hardly a stalling. In the public sector though, employment has shrunk by about 50,000 – or about 1.2 per cent – over that same period.

Those numbers might tell the Bank of Canada something about how the country’s job vacancies are evolving, after hitting record highs this year.

It’s notable that the public sector has experienced relatively low job vacancy rates even as economy-wide vacancies have soared. In the private sector, meanwhile, moderate hiring has continued, while record vacancy counts have begun to decline.

This may be evidence of what Mr. Macklem talked about in a speech in Toronto last month – the notion that, as the economy slows over the next two or three quarters, the glut of vacancies may cushion job losses and unemployment by providing openings for people who may lose their jobs. It’s a reasonable explanation for why private-sector employment has held up, despite signs that domestic demand is slowing.

But wages keep rising

Even if the Bank of Canada looks at those employment trends and decides that the labour market is, indeed, slowing toward a healthier balance, the data also show that wages continue to climb at a decidedly inflationary pace.

The average hourly wage climbed to $32.11 in November, up 5.63 per cent from a year earlier. That pace was up slightly from October (5.55 per cent) and marked the sixth straight month that year-over-year wage growth exceeded 5 per cent. And while the month-to-month pace of increases has slowed, it’s still too early to declare that wage growth has peaked.

The Bank of Canada, then, has to decide just how worried it is about the inflationary signals from wages amid evidence that the labour market is, indeed, slowing.

Wage growth was a latecomer to the labour story as the market tightened, and we can expect it to trail as those pressures now head in the other direction over the coming months; paycheques simply don’t adjust as quickly as hiring when the labour landscape shifts. And yet it will be hard for the central bank to remain patient on wage growth as long as it is still accelerating; it is, without question, a major source of inflationary pressure, especially if employers continue to pass those costs on to customers.

How the bank weighs those forces could well determine the outcome of this week’s rate decision. If it is soothed by indications that a fairly orderly easing of the labour market is well under way, then it may limit its rate increase to a quarter of a percentage point. If worries about wage pressures prevail, another half-point hike is in the cards.