almost every indicator was way below pre - pandemic levels. in the second chart, we see that many indicators are now well above pre - pandemic levels, which provides a clear indication that the labour market is overheated. chart a - 1 : summary of labour market measures through time note : this chart illustrates how much labour market health has recovered across select labour market indicators. a full bar implies that the measure has fully recovered, while a bar on the centre ring implies the measure is at its crisis trough. lfs is labour force survey ; bos is business outlook survey ; jvws is job vacancy and wage survey. for a full list of indicators see e. ens, c. luu, k. g. see and s. l. wee, “ benchmarks for assessing labour market health, ” bank of canada staff analytical note no. 2022 - 2 ( april 2022 ). sources : statistics canada, bank of canada and bank of canada calculations last observations : lfs, october 2022 ; bos, 2022q3 ; jvws, 2022q2 ; national accounts, 2022q2

and we have an exceptionally high number of vacant jobs, there is scope to cool the labour market without causing the kind of large surge in unemployment that we have typically experienced in recessions. as we use higher interest rates to cool inflation, we ’ ll be watching very closely for signs that the economy and the labour market are responding. one way to explore the needed adjustment in our labour market is through the lens of what economists call the beveridge curve. this curve depicts the typically inverse relationship between job vacancies and unemployment ( chart 3 ). chart 3 : cooling labour demand is associated with some increase in unemployment quarterly, seasonally adjusted, dotted line denotes evolution over time vacancy rate ( % of labour force ) 2022q3 unemployment rate ( % ) fitted curve ( 2011 – 19 sample ) observed values note : job vacancies for 2022q3 are based on the average of july and august from the job vacancy and wage survey. the curve is based on data from 2011 – 19. sources : indeed, canadian federation of independent business, statistics canada and bank of canada last observation : 2022q3 calculations as job vacancies decline, unemployment usually goes up. but by how much? that depends on where the labour market is along the curve. generally speaking, when job vacancies are high, as they are now, a decline in vacancies does not lead to as big an increase in unemployment as it does when job vacancies are low to begin with. staff analysis of canada ’ s beveridge curve suggests that the unemployment rate will rise somewhat if the job vacancy rate returns to more normal levels. 6 but it would not be high unemployment by historical standards. 6 the beveridge curve shifted out at the onset of the pandemic, suggesting a higher unemployment rate for any given level of job vacancies. however, chart 3 shows that this shift so what does that mean for canadian workers? well, it ’ s clear that the adjustment is not painless. lower vacancies mean it could take longer to find a job, and some businesses will find that with less demand for their products, they don ’ t have enough work for all their workers. but relieving the pressure in the labour market will contribute to restoring price stability. we ’ ll be watching a broad set of indicators to gauge the health of the labour market and how it is adjusting to tighter monetary policy. as we watch to see how the economy is responding to higher