Winter may be here for the hot job market

When new economic data from Canada, the US, and the EU all tell a similar story… we’d call that a trend worth noting.

What happened: A flurry of new jobs data is showing a sharp slowdown in hiring across Western economies.

• In Canada, unemployment rose to 5.7%, and the economy added fewer jobs than expected.
  
  
• In the U.S., unemployment rose to 3.9%, and the economy added the fewest jobs since June. 
  
  
• In the Eurozone, unemployment unexpectedly jumped to 6.5% from record lows.

Why it matters: Weaker job markets from Paris to Peterborough to Pittsburgh signal a broad economic cooling across developed economies and will encourage central banks to pause rate hikes for the foreseeable future — if they don’t decide to end hikes entirely. 

Yes, but: While the job market is softening, that has — with some notable exceptions — not translated into mass layoffs. Instead, many businesses are just putting a pause on hiring. 

• That’s helping to keep wages up, with yesterday’s data showing that worker wage growth is still above inflation levels in both Canada and the U.S. 

Bottom line: The headlines are gloomy, but these labour trends are what central bankers have been aiming for — or in economic-speak, a “soft landing” that sees inflation fall without putting a lot of people out of work.—TS