Canada's Labor Market Resilience Stands Firm Amidst Tariff Uncertainty

CIBC Economics has released a note arguing that Canada's labor market is stronger than the current tariff headlines suggest. According to CIBC, while tariffs may slow growth in the fourth quarter and potentially beyond, the job market is showing resilience.

The Canadian bank points out that paid jobs made up 63% of net gains over the past year, with part-time roles accounting for just 17% of recent gains. Self-employment remains nearly 500,000 below pre-COVID-19 levels, indicating a shift towards more stable employment options.

This mix of job types is significant because payroll jobs tend to come with steadier hours and pay, supporting household income. Furthermore, the 'hours worked' metric has risen by 1.4% over the past year, outpacing the 1.0% increase in employment. This suggests that employers are using existing staff more efficiently, which can help maintain steady wage-and-salary income.

CIBC's analysis implies that even if hiring slows down due to tariffs, the under-the-hood strength of the labor market could cushion consumer spending and make near-term Bank of Canada rate hikes less likely.