The Canadian Labor Force Dilemma
Welcome back to the Recruitonomics Newsletter! This week we’re diving into the latest Canadian jobs report. The economy added 40,000 jobs in August, but the labor market is struggling to keep pace with the rate of population growth in the country.?
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This Week on Recruitonomics:?
Canada’s Population is Booming, but is Employment Keeping Pace?
The Canadian economy added 40,000 net new jobs in August, a sharp contrast to the meager growth seen in July. The unemployment rate remained unchanged at 5.5%. The Canadian labor market is slowing and struggling to keep pace with population growth in the country.? The increase in employment was driven by growth in key sectors, including professional and technical services, but growth was not broad-based across industries. Population growth in the country has been strong: In August, the 15+ aged population grew by 103,000. Given this pace of population growth, employment growth of approximately 50,000 per month is required for the employment rate to remain constant.?
Read the full article here.
What does this mean for recruiters??
Recruiters are enjoying a large swath of new potential employees with the impressive population growth, but the employment gains are just not keeping up. The labor market is cooling in Canada and recruiters are no longer struggling with hot competition as fewer employed workers seek new positions, and those unemployed are facing a tougher hiring landscape.??
High Frequency Indicators Point Towards German Contraction?
As we’ve highlighted in recent blogs, the German economy is in disarray. In Q4 2022, the German economy entered a technical recession. While the recession technically ended in Q2 of this year – GDP growth was at exactly zero – there is good reason to believe that the German economy might contract again in the latter half of 2023. GDP figures are released with a substantial lag, so economists have increasingly consulted high-frequency indicators to understand where the economy is headed in real-time. These indicators – including restaurant reservations, truck toll mileage, and electricity consumption – suggest the German economy is headed towards another slowdown.?
Read the full article here.
What does this mean for recruiters??
While growth in the second quarter of 2023 was exactly zero, a large number of high-frequency indicators are currently signaling another economic downturn in the months ahead. While the labor market will likely weaken as a result, we think that the structural problems of missing workers will outweigh the cyclical factors. Weak demand will first translate into a significant decline in vacancies before affecting employment. Unemployment will most likely remain low as companies will hoard labor.
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Recently on Recruitonomics:
The labor market is definitely slowing, but the labor force keeps growing. In August, the U.S. economy added 187,000 net new jobs, and the unemployment rate increased to 3.8%. However, much of this increase came from an expansion in the labor force. The prime-age labor force participation rate moved up to 83.5%, the highest level in over 20 years. The Fed will likely feel confident in this cooling labor market – the soft-landing is definitely still on, with no recession on the near term horizon. What does all this mean for recruiters? A less competitive atmosphere. While the jobs market is still tight, the uptick in participation will make recruiting easier.
Read the full article here.
What Recruitonomics is Reading:
The slowing in the labor market has been undeniable but recent revisions show even stronger slowing. These revisions can upend how economists, investors, and the public perceive the economy. How can we better track underlying growth in the economy, without falling victim to revision whiplash? Researchers at Employ America have some suggestions:?
“The main purpose of real-time macroeconomic data releases is to track the evolution in the underlying growth rate of economic activity. The precise levels of employment, wages, total hours, and total dollars of payroll expenditure are less meaningful, and most ripe for substantial revision over time. But even short-run 1-, 2-, and 3-month growth rates in those indicators can be subject to wild revision, such that additional adjustment that accounts for the revision process is essential. The ability to identify when the "underlying growth rate" of the labor market is shifting is most critical for business cycle monitoring. For establishment survey data prone to substantial short-run revisions, it would be a clear improvement to shift attention away from the latest month's reported gain and towards at least a 3-month change (or growth) rate in the 3-month moving average.”
More Data & Insights:
Thank you for reading! Stay tuned for next week's Recruitonomics Newsletter and check out Recruitonomics.com for more data-driven insights.