Market Overview
Labour Force Survey: 'Starting how it left off'
The Canadian labour market kicked off 2024 in familiar fashion, continuing its gradual, but not dramatic, cooling. Employment posted a seemingly respectable increase in January (37,000), but once again job growth failed to match population growth.
In February, employment rose by 41,000 and the employment rate fell by 0.1 percentage points to 61.5%, as population growth (+0.3%) continued to outpace employment growth (+0.2%).
The unemployment rate increased 0.1 percentage points to 5.8%, offsetting a decline in January.
Sources: Statistics Canada, CBC, Indeed Hiring Labs
Jim Dimovski Senior Vice President & Executive Partner Vaco
“The job market in Canada is maintaining a steady, albeit modest, momentum. While job growth is positive, it is important to note that it is still trailing behind population growth, indicating a nuanced landscape. The uptick in the unemployment rate in February was slight and highlights the need for continued monitoring.
The composition of job growth is a mixed bag, with gains predominantly in part-time and public sector positions. However, a silver lining emerges in the form of robust growth in hours worked, showing signs of resilience. Wage growth remains a key player, outpacing other economic indicators, possibly pointing towards a lingering impact of inflation.
Overall, the labour market and all major indicators are stable at the start of the year.
Market Overview
Canadian Staffing Index
The Canadian staffing index—which reflects the volume of labour supplied by temporary staffing agencies in Canada—was 82 in December, down 8.9% versus December 2022.
Month-over-month, the index was down 14.6%.
Scott Asselstine Director of Operations Vaco
“The Canadian temporary employment market today is reflective of unprecedented market conditions over the past several years. Hiring organizations remained cautious throughout much of 2023, putting project work on hold or cancelling initiatives to wait out market conditions. Short-term contract employment grew in 2023 as people worked to offset inflation and other economic pressures, like rising interest rates. Understanding where we are trending, including the uptick in projected growth in the staffing industry, we look for 2024 to continue level-setting some of these less-than-predictable hiring eras of late. Hiring organizations need to remain agile as the temporary workforce provides the much-needed relief and rocket fuel to get work done while market conditions continue to stabilize.”
Market Overview
Recession Watch 2024
Canadian economy “dancing around the edge of recession” going into 2024
Scotiabank forecasts 0.5% economic growth for Canada next year compared to 1.3% growth in the U.S. Despite the U.S. economy’s greater resilience, Scotiabank expects the Federal Reserve to cut rates by 150 basis points in 2024 compared to 100 basis points for the Bank of Canada.
Canada’s economic growth of around 1% in 2023 was boosted by immigration, and the debt-service ratio, which hit a record high of 15.2% in the third quarter, will likely rise again before rate relief arrives.
Scotiabank forecasts inflation in Canada to average 2.6% in 2024 and 2.1% in 2025.
Source: Investment Executive
‘What does 2024 have in store for the Canadian economy?’
- As predicted by many economists, in January the Bank of Canada announced interest rates will remain at 5%, keeping its benchmark the same for the fourth time in a row. The central bank last raised interest rates in July 2023.
- The inflation rate in Canada declined for much of the last year, but moved upward in December. The Bank of Canada's forecasts expect inflation to reach its targets of around 2% by 2025.
- The Canadian economy expanded at an annualized rate of 1% in the fourth quarter, exceeding expectations and easing interest rate-cutting pressure on the central bank.
‘Canadian economic outlook for 2024: Shifting into neutral’
- Canada’s forecasted GDP growth: 0.9%
- Inflation rate: 2-3%
- Expected interest rate decrease: Summer 2024
Source: BDC
James McLernon Managing Director Vaco
“After major layoffs in tech and HR over the past 12 months, it feels like we’re shifting gears from reverse to neutral. Organizations are now settling into a more stable state in terms of staffing for the year. Many companies paused or canceled ‘luxury’ or nice-to-have projects in 2023 and directed their focus on business-critical initiatives only. This is still continuing. There is, however, a notable change in the conversations from last year, which primarily focused on cost savings, to discussions of future growth happening this year. In Q1 and Q2, organizations will be observing the market and their competitors closely; no one wants to be the first to be wrong and there is an overwhelming sense of caution.
As these organizations navigate this dynamic landscape, and as the dust continues to settle from last year, it is important that talent needs get mapped out now. Discussions about company goals and strategies for the latter half of the year require talent planning in the first half of the year in order to avoid project plans falling behind. The pandemic underscored the importance of a prudent approach to tech investment, but there is a balance to be had between understaffing and overstaffing—and it's a lesson we’ve all learned from past corrections. The experience of over hiring in 2021 and 2022 hangs heavily over the heads of technology leaders, who are now wary of investing in talent today. Currently, there seems to be a collective sentiment among technology executives that it's ‘not time yet’—but it will be soon.”