In this week’s ATB Economics Weekly Wrap…

• Alberta - More jobs and a higher unemployment rate
• Canada - Spring employment surprise
• Resiliency with risks - The BoC’s Financial Stability Report
• Interesting Fact: The employment rate for women with young children
• Chart of the Week: Mother’s Day spending

A Mother’s Day special! Our chart of the week is on dining and entertainment spending on Mother’s Day in Alberta.

In an otherwise light week of data, we also have this morning’s employment report.

Alberta employment growth resumes

Alberta returned to its normal growth pattern, gaining new 10,600 jobs in April. The latest comes after a minor dip in March (-3,200).

Looking underneath the hood, the April employment gain came from part-time positions (+14,000) and was entirely driven by the private sector (+6,100) and self-employment (+6,700). Public sector jobs edged lower by 2,200.

At the industry level, a near equal split between goods and service sector job gains, with the resource industries (oil and gas, forestry, and mining), and professional and scientific services leading the charge.

Employment numbers are volatile month to month, and should be interpreted with caution (especially at industry or sub-provincial level).  But longer term changes are instructive and more indicative of trends.

Over the last 12 months, Alberta employment is up 3.8% (trailing only the three Maritime provinces), doubling the 1.9% national increase. This overall growth has been led by a 6.5% increase in private sector jobs.

Canada job growth accelerates in April

Canada’s job market far exceeded expectations last month. Employment leaped 90,400—well above the Bloomberg consensus of +21,000. Job gains were concentrated in Ontario, B.C. and Quebec and led by part-time gains (+50,000).

Normally this would be enough to put a dent in the unemployment rate, but it held steady at 6.1% as job gains were matched by large inflows into the labour market. The unemployment rate is still up a full point over the last year - a sign that Canada’s labour market has softened under the weight of higher interest rates.

The annual pace of wage growth cooled to 4.7%, down from 5.1% the month prior. The combination of sluggish productivity and strong wage growth has added to inflationary pressures and is on the Bank of Canada’s watch list. The Bank has indicated that wage pressures may be easing and this report shows that this is happening (albeit slowly).

This report makes things a little more interesting for the Bank of Canada. Jobs resiliency may give the Bank reason to stay on the sidelines in June. However, a steady unemployment rate in the face of roaring job growth is a clear sign of labour market slack. Further, wage growth is slowly declining and core inflation has been cooperating. While a June cut is still on the table, it will ultimately depend on another soft consumer price reading later this month.

The shift to service employment over the last decade

It’s been roughly ten years since plunging oil prices sank Alberta into a two-year recession in 2015 and 2016. The recovery was prolonged, interrupted by market access issues in 2018-19 and the COVID recession in 2020.

What has happened to employment over that period? Employment fully recovered in 2018 following the 2015-16 recession and then in early 2022 after COVID. But the composition of employment has changed significantly over the decade towards services, reflecting the large pullback in energy investment.

There are many more Albertans working in the service sector (e.g. professional and scientific services, health care). But fewer people are working in the goods sector (namely oil and gas extraction) than the decade prior. This compositional shift away from the goods sector (where wages are higher on average) has contributed to a narrowing of the overall wage premium versus the rest of Canada.

Resiliency with risks - Canada’s financial stability

The Bank of Canada’s Financial Stability Report doesn’t always get that much attention. But in a prolonged higher interest rate environment, ears tend to perk up. Combing through the report, a few things jump out.

Renters show the most signs of financial stress based on delinquency and credit card balances.

For homeowners, the Bank estimates that ‘about’ half of households have yet to face higher interest rates.

The good news? Most households have some financial flexibility, with more liquid assets to draw from than before the pandemic.

The non-financial business sector is in overall “good financial health” according to the Bank, though debt service ratios are rising and small businesses have seen the largest increase in insolvencies.

Cautious optimism in the oil and gas sector

Oil prices are healthy and natural gas prices are expected to improve from their depressed levels. But the main breakthrough is market access. The Trans Mountain pipeline expansion provides much-needed access to new markets for Alberta’s oil sands over the next few years, while Coastal GasLink will do the same for natural gas as LNG Canada comes on line next year.

The latest ATB Capital Markets Energy Sector Survey points to some cautious optimism in the oil and gas sector.  But it also points to risks. Producers are staying disciplined with their capital budgets and optimizing existing assets while increasing production.

This timely survey supports our latest view that oil and gas capital spending will hold fairly steady this year, while oil production will surge. That, in turn, will drive export growth in Alberta and support much-needed productivity gains in Canada.

Interesting Fact: Higher employment rates for women with young children

Women with young children account for much of the increase in female participation rates and the growth in two-earner couples since 1976 according to Statistics Canada. More flexible work arrangements and access to affordable childcare appear to be playing a key role.

For Alberta, the employment rate* for Alberta women aged 25 to 54 with children under the age of 6 rose from 36.5% in 1976 to a record high of 71.2% in 2023. For more, check out our three part series we prepared for Women’s Entrepreneurship Day in November.

*The share of the population working (part-time or full-time)

Chart of the Week: Dining and entertainment spending on Mother’s Day

What are you doing for Mother’s Day? My wife’s birthday is on the same weekend (often the same day), so it’s something I shall not miss!

We all know going out to eat is popular on Mother’s Day. At ATB Economics, our thought was that Mother’s Day could be one of the busiest days for dining out.

To explore this, we looked at the value of daily ATB consumer Mastercard transactions in the “dining and entertainment category” last year.

No other special day that we could find comes close. Valentine's Day? Down the list.  Father's Day?  Not so much.

Fridays and Saturdays are the most popular days of the week for dining out. But Sunday is not, so we can safely attribute the uptick to Mother’s Day - nearly 50% higher than the typical Sunday in 2023. No other Sunday last year came close to matching Mother’s Day for spending on dining out and entertainment.

What does this mean for the economy? This is more under the “fun fact” category and doesn’t necessarily have implications for the outlook.

However, we wouldn’t be surprised to see another busy Mother’s day at restaurants. Restaurant and bar sales have performed relatively well in Alberta amid a broader pullback in retail sales. With higher interest rates biting, there seems to be more of an appetite for going out than spending on big ticket purchases of goods.

Our take: Dining out on Mother’s Day is money well spent - a small token of appreciation for their hard work and sacrifice.

Answer to the previous trivia question: A monkeyboard is the small platform on a drilling rig that the derrickman stands on as pipe is run into or out of the hole.

Today’s trivia question: How many births were there in Canada in 2023?