The Canadian economy has ended the year on a high note by adding over 104,000 jobs last December. There were predictions that the market would slow as the year came to a close. However, this did not happen and there are no signs that it will slow down.
According to Statistics Canada, the unemployment rate in the country fell to 5 percent in December. This was the third decline in the unemployment rate in four months. The number is a step down from the 4.9 percent that had been achieved at the end of June. It is believed that these unemployment numbers were pushed up by new openings in full-time work.
Many economists were expecting the economy to slow down towards the end of last year due to high interest rates. However, the employment market did not feel the pinch of the rising rates. Royce Mendes, the Head of Micro Strategy at Desjardins, said what the economy did was a miracle, as the number was more than 20 times what economists expected from the market.
The Growth Points in Other Sectors
Growth in the labour market points to growth in other sectors of the economy. The expansion of the general economy has left companies yearning for more workers to bridge the gap that appears from increased operations. The retail sector led all sectors in terms of growth, accounting for the majority of new job creation, followed by the service industry. Other sectors, such as production and online service providers, have also experienced growth.
As the economy grows, the general population will have more disposable income that they can use for entertainment. A good number goes to entertainment joints around their areas, while others have turned to online sources. The online sources mostly include video games and casinos. Luckydays Casino is one of the leading Canadian platforms where online gamers are heading.
The Canadian government announced a federal action plan at the start of December with the aim of strengthening internal trade by outlining a strategy to remove barriers. This plan is expected to increase the availability of Canadian products in all sectors of the economy and allow areas to specialise in things they are best suited to produce because they can trade easily.
There are five elements to the strategy, including:
- It is to open the first pan-Canadian Internal Trade Information hub to make data on internal trade open and available.
- Engage all stakeholders to find ways the government can support internal trade in the country.
- Identify the major trade barriers to internal trade and address them.
- Increase the funding of the Internal Trade Secretariat
- Review the Canadian Free Trade Agreement with the aim of lowering exceptions and opening up government procurement to many local providers.
Efficiency Has Not Been Eliminated
Despite the gains in the labour market, inefficiency in the sector remains. Unfortunately, the growth of the employment market has trickled down to working hours. One way this can be explained is that a good number of staff members were taking leave days due to illness and taking care of the children.
Records show that a whopping 8.1% of employees took leave in December due to different issues. This was up from 6.8% in November. The market analysts believe that the market will live with these inefficiencies for a long time until it can adjust itself.
Wages Still Lag behind Inflation
Wages have continued to grow by a good 5% year-over-year for seven straight months. Currently, the growth stands at 5.5%. However, this growth still lags behind the inflation rate, which currently stands at about 6.8%. Companies will eventually be forced to pay more in order to ensure that they get quality workers in their ranks.
Employees are also asking for more money since the cost of living has gone up. As a result, any company that wants to keep its employees must look for ways to improve their compensation and go above and beyond. This calls for regular reviews of the hourly rate, along with other benefits available to workers.
The fourth quarter of 2022 was not too bad, as more young people found work. In December alone, there was over 10% growth in the employment of youth aged between 15 and 24. This effectively covered most of the job losses that this group experienced between July and December. In the same period, there was an increase in the number of women aged 25 to 54 who were employed.
Interest Rates Are Still Very High
The Bank of Canada had previously pinpointed the tight labour market in the country as the leading contributor to the high inflationary pressures. In response to growing prices, the bank raised the interest rate. This was also expected to cool down the economy and ensure that commodities were within everyone’s reach.
These actions were expected to have a severe effect on the labour market. However, it has been resilient over the recent months, defying all odds to keep growing. Due to the better-than-expected performance of the economy, the central bank has signaled that it may pause the hike in interest rates as it retains a speculative approach in dealing with issues in the economy.
However, analysts in the market are not convinced that there will not be any hikes in the near future. Many believe that it might hike the rates by another 25 basis points towards the end of January. This is because the prices are still going up and other pressures have not gone down. The next three weeks are going to be key in determining what will happen to the economy.
More than a third of households are having more difficulty paying their bills than they were two years ago. Interest rates increase along with increased spending may be the best ways through which prices can come down.
