Signs of Trouble in Canada’s Labour Market: Jobs Indicator Reveals Deep Cracks

Canada’s job market is less robust than the country’s most closely watched employment indicator suggests. Data from the payroll employment survey — a census of all paid workers in Canada — indicates the country added a mere 17,000 jobs over the six-month period ending in February. That’s a far cry from the 183,800 reported in the labour force survey, which polls households and is faster to publish results.

The difference of 166,800 jobs is more than 22 times the average gap between the two surveys since 2001, and has been growing for months. During the height of the pandemic, six-month job growth in the household survey exceeded payroll growth by more than 700,000. But that gap now approaches its highest level recorded before 2020, which was 186,100 in 2012.

The payroll survey relies on administrative data reported by businesses for tax purposes, while the labour force survey polls about 56,000 households monthly, providing an earlier indicator of the job market’s pulse. The recent data from the payroll survey indicates a 17,700 job loss in March, contrasting with the household survey’s reported job gains.

Experts suggest that the growing gap between the two surveys may be due to factors like self-employment and the household survey’s small sample size. Despite the divergence, both surveys agree on the weakness in the private sector and strength in the public sector. This discrepancy could impact the Bank of Canada’s policy decisions, with concerns raised about keeping rates too restrictive for too long. Policymakers are expected to set rates on June 5, with economists predicting a 25 basis point rate cut.