The past few years have brought a whirlwind for the quickly evolving Canadian labour market. To keep track of the moving parts, the Indeed Hiring Lab has created a Quarterly Canadian Labour Market Update, a recap of developments based on the latest data from Statistics Canada, Indeed, and other sources. In this first post and in future updates, we focus on where conditions stand today — and cast an eye on what might lie ahead. 

Key Points

  • While the Canadian labour market is strong today, Labour Force Survey data show momentum has cooled, though signals aren’t flashing red.   
  • As of September 23, job postings on Indeed had slipped 9% from their early May peak but were still up 59% from their pre-pandemic level, suggesting hiring appetite remains solid for now.
  • Different wage growth metrics have picked up to between 4.3% and 5.4% year-over-year from around 2.5% at the start of 2022, though the pace of acceleration has eased somewhat in the past few months. 
  • Through August, job seeker confidence in finding new work remained decent, though solid conditions today may give way to a more uncertain outlook ahead.  

Summary

Canada’s surprisingly fast pandemic labour market rebound tapped the breaks this summer. So far, the cumulative progress made over the past year still substantially outweighs recent softening of indicators like the unemployment rate and Indeed job postings, signalling conditions at the moment remain strong for Canadian job seekers. What’s less clear is how long the current situation will last. Measures such as layoffs and jobseeker confidence don’t point to trouble today, but a domestic and global economy increasingly on edge raise concerns going forward.

Employment growth stalls, but level still elevated

Canadian employment experienced a stunning turnaround between the second quarters of 2020 and 2022, according to the Labour Force Survey (LFS). By May 2022, 2.6% more people were working than before the pandemic, outpacing population growth over that period. However, progress has stalled, with employment slipping three straight months through August, bringing net growth since February 2020 back to 2.0%. 

A line chart entitled “Labour market rebound finally cooled in mid-2022” shows the percent change in employment since February 2020 according to the Labour Force Survey (LFS), and the Survey of Employment, Payrolls, and Hours (SEPH), through August 2022.
A line chart entitled “Labour market rebound finally cooled in mid-2022” shows the percent change in employment since February 2020 according to the Labour Force Survey (LFS), and the Survey of Employment, Payrolls, and Hours (SEPH), through August 2022. LFS employment has ticked down between May and August from 2.6% to 2.0% above its pre-pandemic level, while SEPH payrolls have caught up to the LFS trend after lagging throughout the pandemic.

On the brighter side, strong job growth during the first half of 2022 reported by Canada’s alternative set of job numbers, the Survey of Employment, Payrolls, and Hours (SEPH), meant payrolls finally caught up to the LFS trend after lagging throughout the pandemic. As of late September, the SEPH numbers were current through June. Their solid rebound provides assurance the overall Canadian labour market had truly recovered. 

Un- and under-employment just off new lows

The labour market’s cumulative progress over the recovery brought the unemployment rate down to 4.9% by June, the first time it has dipped below 5% since the modern LFS began in 1976. The rate popped back up to 5.4% in August, near where it stood in March, but still matched its pre-pandemic low. Broader measures of joblessness, which include discouraged job seekers, who aren’t technically considered unemployed, and involuntary part-time workers, have followed a similar trend. 

A line chart entitled “Unemployment rate ticks up from multi-decade low” shows the Canadian unemployment rate between January 2015 and August 2022.
A line chart entitled “Unemployment rate ticks up from multi-decade low” shows the Canadian unemployment rate between January 2015 and August 2022. The unemployment rate ticked up to 5.4% in August from 4.9% in July. 

Crucial to this progress has been a substantial decline in the number of Canadians out of work for over a year since mid-2021. While there remains some room for improvement, the drop in long-term joblessness over the past year suggests in some ways, the pandemic-induced recession caused less lingering labour market damage than a typical economic downturn. 

A line chart entitled “Long-term joblessness plunged in the second half of 2021” shows the share of the Canadian population between January 2017 and August 2022 that have been out of work over 12 months and want a job.
A line chart entitled “Long-term joblessness plunged in the second half of 2021” shows the share of the Canadian population between January 2017 and August 2022 that have been out of work over 12 months and want a job. The long term jobless rate spiked in early 2021, but has fallen quickly since. 

Pandemic-era employment shifts persist

Canada’s net job losses over the past three months have overwhelmingly come from retail and wholesale trade, as well as education, the latter from elevated levels of employment growth. Ongoing growth in professional and technical services, finance and real estate — in contrast to reports about layoffs in these areas — as well as manufacturing have partially offset these declines.

Taking a step back, several labour market shifts beneath the main employment numbers that emerged earlier in the recovery have persisted. Employment in industries like accommodation and food services, and “other” services, which include personal care and repair services, remains well below pre-pandemic levels. By contrast, professional and technical services, public administration, and finance and real estate have expanded substantially. Employment growth elsewhere has generally followed the economy-wide trend.

A table entitled “Employment growth has varied widely across industries” shows the percent change in Canadian employment by industry between February 2020 and August 2022.
A table entitled “Employment growth has varied widely across industries” shows the percent change in Canadian employment by industry between February 2020 and August 2022. Professional, scientific, and technical services, public administration, and finance insurance and real estate have expanded substantially, while accommodation and food services, as well as agriculture remain well below pre-pandemic levels. 

Layoff rates edge up but remain low 

One trend that should allay concerns about the recent LFS weakness is that rising layoffs don’t appear to be the main driver of the slip since May. For most of the first half of the year, layoff rates were extremely low, indicating a tight labour market was prompting employers to retain staff. While layoffs have ticked up this summer, they remain on the low end of their usual seasonal pattern. That’s more evidence alarm bells about the job market shouldn’t yet be ringing. 

A line chart entitled “Layoff rate normalizing but still low” shows the share of prior months’ employment that were newly out of work due to layoff, since 2017, with the years 2021 and 2022 highlighted, through August 2022.
A line chart entitled “Layoff rate normalizing but still low” shows the share of prior months’ employment that were newly out of work due to layoff, since 2017, with the years 2021 and 2022 highlighted, through August 2022. Layoff rates were quite low for most of the first half of 2022, but have edged up recently, though they remain on the low-end of their usual August levels.  

Job postings have cooled but are still elevated

In some ways, developments in labour demand are almost the mirror image of what’s happening with layoffs. Job vacancies surged in 2021 and hit new highs in June 2022, according to the latest Job Vacancy and Wage Survey. However, hiring appetite has probably eased over the summer. As of September 23, Canadian job postings on Indeed slipped 9% from their early-May peak, with even larger declines in some fields where postings were particularly elevated, such as software development, loading and stocking, and human resources. Overall, job postings were still up 59% from their pre-pandemic level, suggesting opportunities remain plentiful, but also that momentum has downshifted from earlier in the year. 

Line graph entitled “Canadian job postings elevated but easing.”
Line graph entitled “Canadian job postings elevated but easing.” With a vertical axis ranging from -100% to 100%, Indeed tracked the percent change in total and new Canadian job postings between February 1, 2020 and September 23, 2022. As of September 23, total Canadian job postings on Indeed were up 59% from their February 1, 2020 levels, but down somewhat from early May.

Wage growth picks up but not surging

Conditions were steadily building for stronger wage growth in 2021 as unemployment plunged and job vacancies soared. This finally materialized during the first half of 2022 and carried over into the summer. Average hourly earnings rose 5.4% and 4.3% year-over-year in the August LFS and June SEPH reports respectively, while measures in these series that controlled for the changing mix of jobs were both a tad below 5%. Those four measures all started the year near 2.5%. Despite their different employment trajectories, recent wage growth in the LFS was especially elevated in both accommodation and food services, as well as professional and technical services. 

A line chart entitled “Wage growth has bounced back in 2022” shows the pace of year-over-year growth in average hourly earnings according to the LFS and SEPH, between July 2019 and August 2022.
A line chart entitled “Wage growth has bounced back in 2022” shows the pace of year-over-year growth in average hourly earnings according to the LFS and SEPH, between July 2019 and August 2022. Current wage growth ranges from 4.3% to 5.4% depending on the metric, up from around 2.5% at the start of 2022. 

For households to regain lost purchasing power amid the surge in inflation, price growth will have to cool sharply or compensation will have to accelerate further. A closer look at the recent pace of wage growth suggests it isn’t gathering steam as quickly as it was earlier in the year. This could mean less risk of a future wage-price spiral. But it also raises the question whether inflation can cool quickly in the months ahead while the broader labour market holds up.

Job seekers still reasonably confident despite uncertain outlook

Even without global economic jitters, the pace of Canadian employment growth was eventually going to cool. A key question for the rest of the year is whether the job seekers’ market that emerged during the recovery from the pandemic will persist. And that mainly hinges on whether the economy enters a recession. 

So far, job seekers remain relatively sanguine. This August, 49% of Canadians actively searching for work were at least somewhat confident they could find a new job quickly, matching the proportion in November 2021, and slightly higher than this time last year, according to our latest Job Search Survey. It’s unclear whether this sentiment will hold. 

Line graph titled “Job seeker confidence similar to late-2021 levels.”
Line graph titled “Job seeker confidence similar to late-2021 levels.” With a vertical axis ranging from 20% to 70%, Indeed tracked the share of job seekers confident they can find a job in the next month by employment status between July 2021 and August 2022 with different coloured lines representing employed, not employed, and total. As of August 2022, 49% of respondents who were actively searching for work either agreed or strongly agreed that they were confident they “can find a new job in the next month,” up from 45% a year earlier. 

Methodology

All job postings figures in this blogpost are the percentage change in seasonally adjusted job postings since February 1, 2020, using a seven-day trailing average. February 1, 2020, is our pre-pandemic baseline. We seasonally adjust each series based on historical patterns in 2017, 2018, and 2019. Each series, including the national trend, occupational sectors, and sub-national geographies, is seasonally adjusted separately. This week, we applied our quarterly revision, which updates seasonal factors and fixes data anomalies. Historical numbers have been revised and may differ from originally reported values. New job postings are posts that are seven days old or less. 

The number of job postings on Indeed, whether related to paid or unpaid job solicitations, is not indicative of potential revenue or earnings of Indeed, which comprises a significant percentage of the HR Technology segment of its parent company, Recruit Holdings Co., Ltd. Job posting numbers are provided for information purposes only and should not be viewed as an indicator of performance of Indeed or Recruit. Please refer to the Recruit Holdings investor relations website and regulatory filings in Japan for more detailed information on revenue generation by Recruit’s HR Technology segment.

Data on job seeker confidence comes from separate online surveys of 4,000 Canadian adults ages 18-64 conducted July 15-20, August 9-23, September 13-29, October 11-20, November 8-25, December 6-29, January 10-26, February 7-22, March 7-23, April 11-26, May 9-24, June 13-25, July 11-25, and August 8-23. The survey was conducted among various general population survey panel audiences. Awareness, use, or other relationship with Indeed were not a requirement for participation. There was no mention of Indeed or any other job sites in the survey and respondents were not aware the survey was sponsored by Indeed. 

Weights were applied to match respondent distributions across age, educational attainment, and time spent in Canada with the Labour Force Survey public use microfile data from January 2021 through June 2021.