Friday, July 19, 2024

Canada’s unemployment rate rises to 6.4% as job market stalls

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Youth jobless rate hasn’t been this high since 2014

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Overall, the economy lost 1,400 jobs in June after adding 27,000 positions in May.

Industries that saw declines in employment include transportation, warehousing, culture and recreation, public administration, construction and professional and technical services.

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Industries that saw increases in employment include accommodation, food services and agriculture.

Long-term unemployment also remained elevated in June, with 17.6 per cent of currently unemployed workers out of work for 27 weeks or more. That was down slightly from 18.2 per cent and May, but still well above the recent low of 13.3 per cent last August.

Among youth, the unemployment rate reached 13.5 per cent, the highest since September of 2014, with the exception of the pandemic years of 2020-2021. Returning students are also having trouble finding summer work, with unemployment among this group at 15.9 per cent.

Among provinces, Ontario’s unemployment increased to seven per cent in June. Alberta’s unemployment ticked down slightly to 7.1 per cent. Provinces and territories with the highest unemployment rates include Newfoundland and Labrador (9.2 per cent), Nunavut (8.1 per cent), Prince Edward Island (8 per cent) and New Brunswick (7.7 per cent).

Wage growth continue to increase in June, with average hourly wages up 5.4 per cent year-over-year, an acceleration from 5.1 per cent growth in May.

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Employment and wages are key indicators the Bank of Canada will assess before its next rate decision on July 24.

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Financial Post

“The one major wrinkle here for the Bank of Canada is that wages continue to roll along, with the average hourly wage stepping up to a 5.4 per cent year-over-year pace,” wrote BMO chief economist Douglas Porter, in a note to clients Friday.

“That is a hefty 2.5 points north of inflation — so much for wages not keeping up with inflation — and definitely not headed in the direction of cooling labour costs.”

Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, thinks wage growth as it stands will discourage a faster rate-cutting cycle.

“The acceleration in wage growth is concerning and reinforces the cautious stance the bank will take at their next meeting,” he wrote, in a release on Friday. “They’re in a serious dilemma with both the unemployment rate and wages rising.”

Marc Desormeaux, principal economist at Desjardins, thinks the Bank of Canada will look at more broader measures of compensation to determine their monetary policy report.

“Many of those are still showing a more moderate rate of growth,” wrote Desormeaux, in a note on Friday. “Public sector compensation is also making a larger contribution to headline wage gains than in the past, which we expect the Bank of Canada to look through.”

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Central bank governor Tiff Macklem has expressed confidence that wage growth will subside, noting it always lags changes in employment levels.

While the total number of jobs lost in June was minimal, when accounting for population growth the slowdown was more pronounced.

Porter estimates Canada’s population grew by 99,000 people in June, and by 1.11 million in the past year.

“With little evidence of a slowdown in population growth yet, and with job vacancies continuing to fall, the recent trend of job growth falling short of population is likely to continue for a few more months yet,” wrote CIBC senior economist Andrew Grantham, in a release on Friday.

• Email: jgowling@postmedia.com

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