-- The March Labour Force Survey (LFS) in Canada surprised with a meaningful pop in wage growth at 4.7% year over year, the highest pace since October 2024, said Bankof Montreal (BMO).
In the roughly year and a half since then, the job market has loosened significantly, first due to past monetary tightening, then economic headwinds from the trade war with the United States -- all amid major swings in immigration policy, noted the bank.
Against that backdrop, a 0.7 percentage point acceleration in wage growth in a single month sticks out indeed, stated BMO.
Statistics Canada explained this as a statistical quirk that arose from changing compositions of occupations and job tenures. In other words: wages accelerated because more people moved to higher-paying jobs or stayed long enough to be paid more. When factoring for those factors reveals a 3.6% yearly growth rate, little changed over the last four months.
According to the bank, this jibes with some macro trends: recent net
outward migration disproportionately affects workers -- in other words temporary foreign workers and students -- in lower-paying jobs.
Together with underlying aging, that could also skew the pool of employees towards those who have been in their jobs for longer, pointed out BMO.
Still, it's a surprise to see this shift occur suddenly last month, added the bank. BMO said it will watch to see if it persists. For now, it looks like underlying wage growth is more subdued than the reported rate suggests.