Canada’s unemployment rate is rising, but still unusually low
Unemployment in Canada fell for the third month in a row. Seasonally adjusted employment fell by 39,700 jobs in July, pushing the unemployment rate 0.5 points higher to 5.4%. Previous losses had been attributed to a lack of workers. “… this time we can’t attribute it to a lack of workers,” said Douglas Porter, chief economist at BMO. Most of the jobs lost were full-time, with education accounting for most of the decline. “The details of the report were not great, with full-time jobs falling by 77,200 and industries producing goods and services falling,” Porter said. He emphasizes that while the drop is not great, the unemployment rate is still at an overheated level. “[the unemployment rate is] still at a level (5.4%) that had only been observed once in the 45 years before the pandemic,” he explained.
Canada’s young adults are crushed, accounting for the most casualties
Of note is who lost their jobs and was looking for work — young adults. Most of the job losses last month were among those aged between 20 and 24, representing a loss of 31,200 jobs from a month earlier. The unemployment rate for this group rose to 8.6%, up 1 point and significantly higher than average. Workers aged 25 to 54 also took a big hit. The group shed 25,700 jobs, with unemployment rising 0.6 points to 4.6% in July. At least the unemployment rate for this demographic remains extremely low. Canada’s seniors saw some losses but were overall winners of the group. Workers age 55 and older saw employment increase by 10,800 jobs, with the unemployment rate rising just 0.3 points to 5%. Not only is the rate still below average with the lowest growth of any cohort, but it is also full time.
The building slowdown is starting to bite, conditions are cooling fast
Higher interest rates are starting to slow employment. Construction jobs fell by 28,200 jobs in July, accounting for most of the losses along with education. While training may pick up at the September show, construction is more likely to be a bit longer. Prices are expected to rise further from here. “While we can easily find some ‘yes buts’ in this release, there is no debate that conditions are cooling quickly, with the contraction in manufacturing a clear indication that rate hikes are starting to bite,” Porter said. . Remember, these are still strong employment numbers and the market is considered overheated. However, this is an overheated labor market that produces more inflation than economic output. Job losses are likely to lead to an economic contraction before inflation stabilizes, making it difficult to use rate cuts to soften the blow without identifying even greater risk.
