Q4 2024 Canada Labour Market Brief: Increasing Job Growth, Rising Unemployment and Lower Labour Force Participation

Actalent's quarterly Labour Market and Economy Report connects important dots between data and trends across Canada’s engineering and sciences hiring landscape. Readers can expect to learn about job growth, wage growth, inflation, unemployment rates, labour force participation rates and other key factors that impact the attraction, hiring and retention of workers.

Executive Summary

Canada's economy added 155,900 jobs in Q4 2024, exceeding the net 66,000 jobs added in the third quarter. Employment gains in November and December were both stronger than anticipated, but the rising unemployment rate, declining job vacancies and a low labour force participation rate suggest that the labour market has significant room for improvement.

The unemployment rate increased from an average of 6.5% in Q3 to 6.7% in Q4 2024. Almost half (45%) of the unemployed population in the fourth quarter were new entrants to the labour force, while 39% had lost their job and 16% had quit their job prior to being unemployed.

Among the industries Actalent supports, Q4 2024 unemployment rates were as follows: healthcare (1.7%), utilities (2.2%), professional, scientific and technical services (3.7%), manufacturing (4.0%), and construction (5.3%).

Year-over-year inflation remained close to the Bank of Canada’s (BoC) 2.0% target in Q4, ending at 1.8% in December. The BoC lowered its key interest rate by 50 basis points in both October and December, marking five total rate cuts in 2024. High interest rates can have a lagging effect, but easing monetary policy may benefit economic and hiring activity in the long term.

The year-over-year average hourly wage rate for all employees increased by 4.3% from Q4 2023 to Q4 2024, 0.7% below the annual wage growth observed in Q3. In terms of "real" earnings (adjusted for inflation), wages continue to outpace inflation.