Q4 2023 Canada Labour Market Brief: Job Growth Slowed Considerably and Unemployment Rose

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

Employment growth slowed during Q4, with the economy adding only 42,500 new jobs, compared to 97,300 jobs added in Q3.

Meanwhile, the unemployment rate increased from 5.5% in Q3 to 5.8% in Q4. Among the industries Actalent supports, Q4 unemployment rates were as follows: utilities (1.5%), healthcare (1.6%), construction (5.5%), professional, scientific, and technical services (3.4%), and manufacturing (3.6%).

Year-over-year inflation decreased significantly in October, down to 3.1% from 3.8% in September. It stood unchanged at 3.1% in November. In December, it went back up to 3.4%, due in part to higher gasoline prices. Overall, inflation is gradually declining, but it’s still above the Bank of Canada’s target rate of 2.0%.

The average hourly wage rate for all employees increased 5.0% from Q4 2022 to Q4 2023. That is the same annual growth rate observed in Q3. Real earnings also continued to outpace inflation last month.

Overall, slower business conditions are easing labour market demand, according to the Bank of Canada. Stalling job growth and rising unemployment have many economists believing that the Bank of Canada may finally cut interest rates, but stronger-than-expected wage growth could delay the timing.