A TD Bank economist predicts Canada’s labour market will cool this year but perform better than it has in previous downturns. 

Marc Ercolao wrote in a report published Monday that the current labour market outlook is different from previous economic downturns that were characterized by significant and continued employment contractions.

In 2024, he predicted that rising unemployment rates will be driven primarily by growth in labour supply, and not a “mass deterioration in hiring.” 

“Canada’s job market has been holding up well against the Bank of Canada’s historic monetary tightening campaign,” Ercolao wrote. 

Amid Canada’s pandemic recovery, the report said strong population growth helped meet high labour demands, leading to temporarily increased participation rates.

Last year Canadian employment grew above trend at 2.4 per cent, he said, while adding around 500,000 net new jobs. 

“While private-sector job creation has ratcheted down significantly in recent months, mass job losses have failed to materialize as some forecasters had been anticipating,” Ercolao said. 

“Instead, weaker hiring has helped to unwind some of the excess tightness in the nation’s labour market and pressure up the unemployment rate up to 5.8 per cent – a rate firmly in line with 2019 levels.” 

Wage growth

Ercolao noted that wage growth continues to be “running too hot,” but said that is anticipated to ease as the labour market slows, with higher unemployment and lower job vacancies. 

“However, rising union wages – which tends to lag the job market cycle – may delay this moderation,” he noted. 

Wage growth reached 5.5 per cent year over year, which the TD report said was double the rate of average growth between 2011 and 2019. 

While parts of the public sector labour market are “still notably tight,” the report noted that private sector hiring has slowed significantly over several months. 

Specifically, Ercolao said public industries like health care, public administration and education as well as construction and oil and gas are still seeing hiring demand. 

Hiring across provinces

Across provinces, the report predicted Ontario, Quebec and B.C. will “suffer from a more pronounced slowdown in hiring.”

Alberta and Atlantic Canada are expected to fare better with “still-decent employment growth.”