Canada: January saw wage growth finally pick-up for full-time workers – ING

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“When it comes to the story of sluggish wage growth, the Groundhog Day we’ve been seeing since June last year has finally changed its tune,” argues ING’s chief international economist, James Knightley. “January saw wage growth finally pick-up for full-time workers, and we don’t expect this to just be a temporary relief.”

Key quotes

“After the hiring blitz in November (+94,000), there was a much slower pace of job gains in December (+9,300), but Canada is back on track in January creating 67,000 jobs. The unemployment rate ticked back up to 5.8% after sitting at a four-decade low of 5.6% for two months as more people entered the labour market.”

“That said this is still a relatively low unemployment rate and jobs are still being created, so on face value, the picture is pretty positive and won’t be too much of a concern for the Bank of Canada (BoC). “

“If we continue to see wages heading in an upward direction and the job creation momentum carries on, we anticipate household activity should still contribute a decent amount to growth this year. This is despite headwinds such as a housing market correction and higher rates feeding through into the economy. This would support our view that the central bank could hike rates twice this year – likely in the third and fourth quarter – although the risks are skewed to the downside on this.”

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