Headlines announcing layoffs continue to crowd our feeds, and yet there are very few signs of cracks in the overall Canadian and US labour markets… so, what gives?
What happened: After blowing past economist expectations last month, newly dropped Stats Canada data shows the economy continues to outpace expert predictions after adding a whopping 22,000 jobs last month—mostly across healthcare and social assistance. The sectors that saw the worst losses, however, include business (checks out) and finance.
- The US economy also left economists feeling silly after its latest jobs report surpassed expectations to add over 311,000 jobs, although wage gains did slow.
- In fact, in half of the 38 OECD countries, including Canada, France, and Germany, there has never been a higher share of working-age folk clocking in at a job.
Why it matters: Labour market strength in the face of high interest rates presents a puzzling picture for the Bank of Canada. After pausing rate hikes this month, it may have to resume hiking until something in the economy gives. The US will consider its incoming inflation numbers and the strain on the banking sector spurred by the fallout of Silicon Valley Bank.
- It is strange that as business confidence sinks to below long-run averages and GDP growth slumps or reverses, employers are hanging onto employees for dear life.
But there are some potential answers. One is that it’s becoming really hard to find good talent, just as the number of Canadians nearing retirement age hits record highs. Employers don’t want to let people go unless they have no choice. Another is that they want to avoid their pandemic-era mistakes, when mass layoffs turned into a re-hiring nightmare. —SB