If your client’s goals include increasing their income, economic headwinds and tailwinds in the months ahead could affect their chances of success.
For example, despite Canada’s strong performance on jobs growth recently, wage increases have been modest—a situation that’s expected to continue. In a report, Benoit Durocher, a senior economist at Desjardins, explains why.
He says jobs growth in recent months has been accompanied by a slowdown in the number of hours worked, because part-time jobs have increased at almost twice the rate of full-time ones in the last year.
“As such, the number of hours worked in jobs with one to 14 hours of work a week was up 8.2% in the last year, while hours of jobs at 35 hours a week or more declined by 0.3%,” Durocher said.
Further, the slower growth rate in hours worked coincides with Canada’s slower rate of economic output, which has resulted in a lower rate of real GDP per hour worked—essentially lower productivity. With weaker productivity, “growth in worker compensation is likely to remain moderate in the months ahead,” Durocher said.
With wage growth not contributing to inflationary pressure, the central bank will likely hold rates until 2020, he added.
While Canada’s economic growth is expected to slow this year, a National Bank report emphasized the positives, including jobs growth in the private sector. In the last six months, Canada created more than 300,000 private sector jobs, the National Bank report said—the largest six-month tally ever recorded.
For clients in their key working years, the details on jobs growth are especially positive: the employment-to-population ratio hit an all-time high of 83.4% in February for those 25-54. Says the report: “The fact that jobs are being created in the 25-54 age group […] is positive for household spending on durable goods and homes.”
That result means the labour market is a sign that recession fears are overblown, the National Bank report says. Other positive signs are private-sector investment intentions, government spending and improved trade.