Canada’s Average Weekly Earnings (AWE) for November 2025 rose 3.10% year-over-year, beating the consensus estimate of 2.90% and improving slightly from October’s 3.01% gain, according to the Sigmanomics database. This marks a continuation of the wage growth slowdown observed since early 2025, when AWE peaked at 5.80% in February. The moderation reflects the combined effects of monetary tightening, subdued inflation pressures, and evolving labor market dynamics.

Drivers this month

• Shelter-related wage gains contributed approximately 0.18 percentage points to the increase.
• Service sector wages remained resilient, supporting overall earnings growth.
• Manufacturing and resource extraction sectors showed modest wage moderation.

Policy pulse

The 3.10% increase remains above the Bank of Canada’s inflation target midpoint of 2%, suggesting persistent wage pressures. However, the deceleration from early 2025’s double-digit gains signals some easing in labor cost inflation, aligning with the central bank’s tightening cycle aimed at cooling demand.

Market lens

Following the release, the Canadian dollar (CADUSD) strengthened modestly by 0.15%, reflecting improved investor confidence in Canada’s economic resilience. Short-term government bond yields edged up by 5 basis points, pricing in a slightly higher probability of further monetary tightening.

Average Weekly Earnings serve as a critical barometer of wage inflation and labor market health. The 3.10% YoY rise in November 2025 contrasts with the 12-month average of roughly 4.30% since February, highlighting a clear deceleration trend. This slowdown is consistent with other core macroeconomic indicators such as employment growth, CPI inflation, and productivity metrics.

Monetary Policy & Financial Conditions

The Bank of Canada’s policy rate currently stands at 4.75%, up from 3.25% at the start of 2025. This tightening has contributed to slower wage growth by dampening demand and credit expansion. Financial conditions have tightened, with mortgage rates rising above 6%, impacting consumer spending and housing-related wage components.

Fiscal Policy & Government Budget

Federal fiscal policy remains moderately expansionary, with targeted infrastructure spending and social transfers supporting household incomes. However, fiscal restraint in other areas limits broader wage acceleration. The government’s balanced budget approach constrains stimulus, indirectly influencing wage growth moderation.

External Shocks & Geopolitical Risks

Global supply chain disruptions have eased but remain a risk factor. Geopolitical tensions, particularly in energy markets, have kept inflation expectations elevated, indirectly supporting wage demands in energy and resource sectors.

Comparing monthly changes, the MoM increase in November was 0.09 percentage points, signaling a slight rebound after October’s dip. The 12-month average wage growth has declined steadily from 5.80% in February to 3.10% in November, underscoring the effectiveness of policy measures in tempering wage inflation.

Market lens

Immediate reaction: CADUSD rose 0.15% within the first hour post-release, while 2-year Government of Canada bond yields increased by 5 basis points, reflecting market anticipation of sustained monetary tightening.

Looking ahead, wage growth in Canada faces a complex interplay of factors. The Bank of Canada’s monetary policy trajectory, fiscal measures, and external risks will shape the pace of earnings growth. We outline three scenarios:

Bullish scenario (20% probability)

• Wage growth accelerates to 4.00%+ YoY by mid-2026 due to tight labor markets and stronger inflation persistence.
• Monetary policy loosens as inflation remains above target, boosting consumer spending and wage demands.

Base scenario (60% probability)

• Wage growth stabilizes around 3.00–3.50% YoY, reflecting balanced labor supply and demand.
• Monetary policy remains cautious, with gradual rate adjustments to maintain inflation near 2%.

Bearish scenario (20% probability)

• Wage growth slows below 2.50% YoY due to economic slowdown or external shocks reducing labor demand.
• Monetary policy tightens further, risking recessionary pressures and wage stagnation.

Policy pulse

The Bank of Canada will closely monitor wage trends as a key inflation driver. Persistent wage growth above 3% may prompt further rate hikes, while a sustained slowdown could ease policy pressures.

Canada’s Average Weekly Earnings growth of 3.10% in November 2025 signals a moderated but resilient labor market. The data aligns with broader macroeconomic trends of slowing inflation and tighter financial conditions. Policymakers face a delicate balance between containing wage-driven inflation and supporting economic growth. External risks and fiscal policy will also influence future wage dynamics. Investors and analysts should watch upcoming labor market reports and central bank communications for clues on the next phase of wage growth and monetary policy.

Key Markets Likely to React to Average Weekly Earnings

The release of Average Weekly Earnings data typically influences currency, bond, and equity markets sensitive to inflation and labor costs. The following five tradable symbols historically track or react to Canadian wage trends:

• CADUSD – The Canadian dollar often strengthens with higher wage growth due to inflation and rate hike expectations.
• TXN – Technology stocks like TXN are sensitive to wage inflation impacting input costs and consumer demand.
• SHOP – Retailers such as SHOP respond to wage-driven changes in consumer spending power.
• BTCUSD – Bitcoin’s price can reflect risk sentiment shifts tied to economic data surprises.
• EURCAD – The EURCAD pair reacts to relative economic strength and wage-driven inflation differentials between Canada and Europe.

FAQ

What is the significance of Average Weekly Earnings in Canada?

Average Weekly Earnings measure wage inflation and labor market health, influencing monetary policy and economic forecasts.

How does wage growth affect the Bank of Canada’s decisions?

Rising wages can increase inflation pressures, prompting the Bank of Canada to adjust interest rates to maintain price stability.

What are the risks to future wage growth in Canada?

Risks include economic slowdown, external shocks, and tighter financial conditions that could reduce labor demand and wage gains.

Key takeaway: Canada’s November 2025 wage growth shows moderation but resilience, signaling ongoing inflation pressures that will shape monetary policy and market dynamics in the near term.