In the first major economic release of 2024, Alberta’s labour market finished 2023 with a modest increase in employment in December.

Employment has moved back on track in recent months, advancing by 6,700 in December following a 8,900 gain in November. The latest readings come after a topsy-turvy ride in September/October, which saw employment fall and then rise by around 38,000. Last year the province added jobs in 10 of the 12 months (see chart). Year-over-year employment growth in December stood at 3.9%—well ahead of the 2.2% national gain.

At the national level, there were more signs of a cooling labour market. Canadian employment disappointed with a flat reading, below the Bloomberg median estimate of a 15,000 increase. The unemployment rate held at 5.8%—up from its low of 5.0% in April and staying at its highest level since January 2022. The steady unemployment rate was due to a decline in the participation rate as population growth remained elevated. With such rapid population gains, job growth will need to pick up materially to prevent future increases in the national unemployment rate.

One nagging concern for the Bank of Canada is wage growth. It remained stubbornly high, coming in at 5.5% year-over-year last month. The Bank of Canada has argued that such hot wage readings are inconsistent with the 2% inflation target, especially in light of declining labour productivity. While a softer labour market should alleviate wage pressures going forward, wages are something that the Bank will continue to raise as an inflation risk.

Overall, this report does not change our view that the Bank of Canada will stay on the sidelines this month. It will note the softening economic backdrop and cooler inflation readings, but also point to stubborn wage pressures, shelter costs, and elevated inflation expectations. We expect a cautious approach from the Bank, with the first rate cut in June.

Alberta Labour Force Highlights for 2023

With a full year of data in the bag, we take a quick look at how Alberta’s labour market fared in 2023.

Strong start, bumpy autumn, steady finish

The Alberta labour market jumped out of the gates with jobs rising by 20,700 in January.  Growth cooled before picking up in the summer months. Employment plummeted in September, before reversing the loss in October and then finishing with gains in the final two months. Overall, employment rose by 3.6%, or 85,000, in 2023.

Second fastest employment growth among provinces

Alberta employment has held up relatively well in the higher interest rate environment. The province’s 3.6% job gain in 2023 was well above the 2.4% national increase and second only to PEI’s 5.7% gain.

Unemployment holds fairly steady despite population surge

For the most part, enough jobs were created last year to keep pace with the influx of migrants and resulting surge in the labour force. The annual unemployment rate nudged up 0.1 points to 5.9% in 2023 despite a 3.7% gain in the labour force—the strongest increase since 2007.

Full time, private sector positions lead the gains

Looking at the details, employment gains in 2023 were concentrated in full-time positions (+4.3%) and in the private sector (+4.6%).

The service sector posted a gain of 3.7%, slightly outpacing the 3.3% increase in the goods sector. Growth was fairly broad based last year across industries, led by transportation and warehousing, professional services, and manufacturing.

Hourly earnings improve

Wage growth picked up after lagging the previous two years. Average hourly wages (in the Labour Force Survey) rose 3.9% in 2023 following a 1.2% increase in 2022.

Our Weekly Wrap will return next Friday.

Answer to the previous trivia question: Small businesses (i.e., those with between 1 and 99 employees) account for 98% of all employer businesses in Canada.

Today’s trivia question: Of the 38 countries in the Organisation for Economic Co-operation and Development (OECD), which one has the highest employment rate?