The Canadian economy added 39,800 jobs last month, as increased hiring for full-time work pushed the unemployment rate down to an all-time low of 5.1%.

Statistics Canada reported Friday that more than 135,000 people found full-time jobs during the month. This more than offset a decline of 96,000 part-time positions.

The jobless rate fell slightly for the third consecutive month, settling at the lowest since comparable record-keeping began in 1976.

The surge in hiring in May adds to the expansion that the Canadian economy has experienced in recent months. After losing more than three million jobs at the start of the COVID-19 pandemic, the Canadian labor market has slowly and steadily recovered.

Booming demand for workers

In November 2021, Canada finally had the same number of workers as before the pandemic. When the May figures are included, it now has half a million more than it did then.

The balance between vacancies and workers has shifted almost completely from imbalance to one where employers cannot find enough people to work.

“As we begin the ritual of filling patios and hitting the road for the overdue vacation, employers continue to seek workers to meet increased demand,” said TD Bank economist James Orlando. , about numbers. “This has vacancy rates at record highs, which clearly shows that the Canadian economy is operating beyond full employment.”

According to Statistics Canada, the unemployment-to-vacancy ratio has reached a historic low of 1.2.

As Vice President of Human Resources at The Canadian Brewhouse, a restaurant chain with 42 locations across Canada, James Martyn knows firsthand how tight the job market is right now.

Like many hospitality businesses, Brewhouse has scaled back operations during the pandemic, but in recent months the chain has started to expand again, to meet consumer demand for restaurants.

Even with competitive salaries and steady raises planned, Martyn says it’s a challenge to retain and grow staff, but he’s pleased the chain has managed to hire around 800 new people in the past two months. including in a brand new location in Victoria that boasts the largest rooftop terrace in Western Canada.

“A lot of people are, even though they keep going back to work, they’re going to places where they can work from home,” he said in an interview. “I don’t think there’s anything wrong with that. But it challenges commercial operators, especially if you have a business like hospitality where there’s no working from home.”

This demand for workers is also driving up wages. The data agency says the average hourly wage has increased by $1.18 over the past year, to $31.12 an hour. This is an increase of 3.9%. While this is an impressive clip by historical standards, it is still well below the country’s official inflation rate of 6.8%.

Unprecedented leverage

Workers have unprecedented leverage right now, and many are looking for better-paying positions — and getting them.

Ellen Yifan Chen was a lawyer at a large law firm in Quebec and recently made the leap to a new job as General Counsel at a Montreal-based technology company.

She was forced to change by the same factors that motivate many people, including flexibility, new challenges and the ability to work from her home in Quebec. But in the end, dollars and cents made a major difference.

“I managed to get a raise in my salary as well as a signing bonus,” Chen said in an interview. “I would say that was a big motivator for me to finally take the leap.

As a lawyer at a large law firm, Chen said she was told for years to expect her pay to drop if she decided to go elsewhere, but she says she noticed a drastic change in her industry lately.

“For the past six months, I’ve heard offers right off the bat from recruiters that match or exceed my salary that I was earning before,” she said.

“A lot of my friends also change jobs. I looked at LinkedIn almost every day, and someone [was] to change job.”

Higher wages and ample job opportunities are great news for workers, but less so for central bankers tasked with curbing runaway inflation.

“This is an unwelcome sign for the Bank of Canada as higher wages drive up consumer demand and therefore inflation,” said Jay Zhao-Murray, an analyst at currency exchange firm Monex.

“A tight labor market where workers have more bargaining power points to even higher wage growth across the board. Without some slowdown in wage growth, central bankers will continue to worry that the hot labor market makes their job of reducing inflation even more difficult.”