If you were planning on asking the boss for a raise, it might be better to do it sooner rather than later.
That's because one economist says wage growth in Canada is likely near the top after almost a year of above-average pay increases.
"Although the unemployment rate remains near a record low, the decline in vacancies suggests that labour market conditions have nevertheless eased, supporting our view that wage growth is close to a peak," Stephen Brown, deputy chief North American economist at Capital Economics, said in a note to clients on Wednesday.
Canada's job vacancy rate was 4.8 per cent in the fourth quarter last year, and while that's still above pre-pandemic levels, it marked a slowdown from the previous quarter when the rate was 5.6 per cent.
The labour market has been a consistent bright spot in the economy, with job creation in overdrive. Between September and March, 383,000 more jobs were added, according to Statistics Canada.
However, Brown notes job vacancies in white-collar service sectors in particular, such as professional services and information technology, are starting to fall. Those types of higher-paying industries have been a key driver of overall wage growth.
"Although vacancies rose across the board during the pandemic, most of the pick-up in wage growth since 2020 can be explained by trends in just a handful of sectors," he said.
Average wage growth remained above five per cent between March and last June in all but one month, Statistics Canada data show. The latest wage growth figure for April will be released on Friday in the Labour Force Survey.
Wages have been a key focus for the Bank of Canada because of the risk of creating a wage-price spiral, where high inflation and rising wages feed into each other, creating a feedback loop that can be difficult to break.
In sectors where job vacancies have been elevated such as manufacturing, construction and healthcare, wage increases haven't been significant, Brown says.
"Healthcare pay in Canada is, to a large extent, a policy choice, while the recent weakness in housing starts and the manufacturing surveys suggest firms in those sectors are unlikely to start bidding up wages now," he said.
"Accordingly, with labour market conditions normalising in those sectors that explain much of the strength of earnings since 2020, we have little reason to doubt the message from the surveys that easing labour shortages will cause wage growth to slow."
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.