Canada continues to have a very low unemployment rate

Posted Aug 7, 2022 8:00 a.m. EDT

The unemployment rate in Canada remained stable at 4.9% in July, equaling the record low of the previous month.

The total number of unemployed remained stable at one million in July. In addition, 426,000 people wanted a job but were not looking for one and therefore did not meet the definition of unemployed. Little changed for the sixth month in a row. The adjusted unemployment ratee—wwho represents this source of potential labory—rremained at 6.8%, the lowest rate since comparable data first became available in 1997.

In addition, employment in Canada fell by 31,000 jobs, which, according to Statistics Canada, does not represent a significant change. Canada lost about 74,000 jobs from May to July, but from May 2021 to May 2022, employment increased by more than one million.

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That said, July marks the second consecutive month of declining employment in Canada. In addition, the record unemployment rate coupled with over one million job vacancies means that Canada continues to face a tight labor market.

“Two straight months of declining employment indicate that the Canadian labor market is facing capacity constraints, with little room for upside,” RBC economist Carrie Freestone writes in an economic update. . “The demand for workers is still very high, with job vacancies still 65% higher than pre-pandemic levels (although the number of job vacancies continues to decline), and there are few Unemployed Canadians available to fill these vacancies.”

Employment among public sector employees fell by 51,000 (1.2%) in July, the first drop in the sector in 12 months. The decline was largely concentrated in Ontario and Quebec. Despite the month-over-month decline, public sector employment was up 5.3% (+215,000) from July 2021.

The number of self-employed rose by 34,000 (+1.3%) in July after falling by 59,000 (-2.2%) in June. Despite this increase, self-employment remained stable year over year at 214,000 (-seven0.4%) below its pre-pandemic level of February 2020.

Employment fell by 53,000 (-00.3%) in the services sector in July. Wholesale and retail trade contributed the most to the losses in this sector. The number of people working in wholesale and retail trade fell by 27,000 (-00.9%) in July, the second consecutive monthly decline. Most of the net decrease occurred in Ontario and Quebec.

“Job losses were oddly concentrated in the service sector, including wholesale and retail trade, education and health care,” CIBC’s Andrew Grantham told Reuters. “With some of these sectors showing high vacancy rates; labor supply rather than demand seems to be the main problem. That said, the main difference between today’s report and last month’s report is that wage growth has unexpectedly slowed.

Employees’ average hourly earnings rose 5.2% (+$1.55 to $31.14) year over year in July, roughly the same rate of year-over-year increase to the other observed in June (+5.2%; +$1.54). For a second consecutive month, the average hourly wage increased at a similar pace among part-time (+5.0%; +$1.05) and full-time (+4.9%; +1.52) employees $). Earlier in 2022, wage growth had been faster among full-time employees than among part-time workers.

The latest inflation data shows that the Consumer Price Index rose 8.1% year over year in June, the largest annual change in nearly 40 years.

“The rising cost of living is heating up the collective bargaining table,” economist Liam Daly wrote in a Conference Board of Canada press release. “Given the rate of inflation, unions say typical annual wage increases are simply not enough. Amid high vacancy rates and low unemployment, workers are negotiating from a strengthened position.

BMO economist Doug Porter said in a statement to Reuters that the main takeaway is that the labor market is still very tight.

“We still face the lowest unemployment rate in at least 50 years and wages that are strong,” Porter said. “But from a growth perspective, the reality is that employers are struggling to find employees, which limits the growth of the economy.”

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