Canada’s economy lost 1,400 jobs in June as unemployment rose to a 29-month high of 6.4 percent, according to the latest job market report from Statistics Canada.
The country’s unemployment rate has grown since April 2023, rising 1.3 percentage points.
This latest Canada Labour Force Survey* contains mixed signals for newcomers and international students arriving in Canada looking for jobs.
Some experts say the labour market struggles to absorb a rapidly growing population.
Advertisement:
“It’s the temporary foreign workers (TFW) who are coming into Canada in excessive numbers that are driving the unemployment rate higher,” says Derek Holt, Vice President and Head of Capital Markets Economics at Scotiabank.
The TFW category includes international students, seasonal workers (such as in the agricultural sector), and refugees, mainly from Ukraine and Syria.
Related Posts:
Working in Canada | A Guide to Land Your Dream Job!
Employment Services Help Newcomers Work in Canada
Canada Job Bank | Your Vital Research Tool
Advertisement:
Unemployment Likely to Continue Rising
“Canada is still taking on far too many people in this category,” said Holt, “and this will persist until at least later this year.
“If the Federal government and provinces do not reach agreement on curtailing this category as announced and do so soon then the unemployment rate is likely to keep rising.”
Canada Job Market Report Highlights:
- There were 1.4 million unemployed individuals in June, an increase of 42,000 from May.
- Only 21.4 percent of those unemployed in May found jobs in June. That’s a lower rate than the pre-pandemic average of 26.7 percent.
- The proportion of long-term unemployed (more than 27 weeks) rose by 4 percentage points to 17.6 percent.
- Quebec had a net loss of 18,000 positions (-0.4 percent).
- New Brunswick, Newfoundland, and Labrador had employment gains of 3,000 (+0.8 percent) and 2,600 (+1.1 percent) positions, respectively.
- Average hourly wages in June were $34.91. That’s an annual growth rate of 5.4 percent, up from 5.1 percent in May.
- The unemployment rate for youth (aged 15-24) rose to 13.5 percent in June. That’s the highest level since September 2014 (excluding the early COVID-19 pandemic).
- Employment for those aged 25-plus was up by 23,000, led by women. Scotiabank’s Holt called this the “strong silver lining” in the recent job market report. Most immigrants fall into this age category.
Changes in the Canadian Job Market by Sector
| INDUSTRY | % CHANGE MAY TO JUNE 2024 |
|---|---|
| Agriculture | 5.5 |
| Natural Resources | 0.9 |
| Utilities | -2.0 |
| Construction | -0.2 |
| Manufacturing | 0.2 |
| Wholesale and Retail Trade | -0.4 |
| Transportation and Warehousing | -1.1 |
| Finance, Insurance, Real Estate, Rental and Leasing | 0.3 |
| Professional, Scientific and Technical Services | -0.5 |
| Business, Building and Other Support Services | -0.2 |
| Educational Services | 0.5 |
| Health Care and Social Assistance | 0.1 |
| Information, Culture and Recreation | -1.3 |
| Accommodation and Food Services | 1.5 |
| Other Services (Except Public Administration) | 0.9 |
| Public Administration | -0.7 |
Job Market Losses In Good Paying Positions
Some job loss trends are worrisome, says Ryan Sims of The Mortgage Group.
According to Statistics Canada, the June job loss of 1,400 included a gain of 1,900 part-time positions but a loss of 3,400 full-time jobs.
Some economists were predicting a gain of 25,000 jobs in June.
“We are seeing job losses in areas like manufacturing, office work, and solid jobs, but massive increases in fast food, accommodation (hotels), etc.,” Sims said. “We are trading in good paying positions for temporary, low-wage positions.”
At this point, it is anyone’s guess how this will impact the Bank of Canada’s future interest rate cuts.
Canada’s economy is not falling off a cliff
Leslie Preston, TD Economist
In June, the Bank cut its benchmark interest rate to 4.75 percent from 5 percent.
Cuts to the interest rate affect loans for home mortgages, cars, and other manufactured goods and services. They also affect the price of food, rent, and jobs.
Economist Tu Nguyen of accounting firm RSM Canada said that Canadian employers are being “squeezed” by high interest rates, preventing them from hiring.
Nguyen forecasts hiring will be slow until the end of 2024.
Population Growth is a Job Market Factor
Many economists predict the Bank will wait for upcoming critical economic reports, such as the one on inflation, before deciding whether to cut at its July 24 meeting or wait until September.
BMO Chief Economist Douglas Porter says the latest job market report “drives home the point that the Canadian labour market can simply no longer be considered tight – in fact, it is quickly tipping in the other direction.”
“As a standalone result, the softening job market raises the odds of a Bank of Canada rate cut,” Porter said. “However, (rising) wages remain the very definition of sticky, which will give the Bank pause.”
Leslie Preston, an economist at TD, agrees that the Bank will weigh more economic data before deciding on rates.
“In either case, Canada’s economy is not falling off a cliff,” said Preston, “and we expect rate cuts will be gradual over the remainder of the year.”
However, Scotiabank’s Holt says that population growth remains a factor in the Canadian job market.
“Excessive population growth particularly in the temps category is responsible for a rising unemployment rate and it is of no service to anyone to candy coat this fact,” said Holt.
Job Market Creation is Not Keeping Pace
Two National Bank economists also highlight the growing divide between job creation and recent strong population growth.
“Job creation hasn’t kept pace with the population’s meteoric rise for some time now,” economists Matthieu Arseneau and Alexandra Ducharme said.
“A stagnation in employment as observed in June, while the population is up by 100,000, is a recessionary deviation.”
Canada’s population has risen by 1.1 million people year-over-year.
The country is on track to meet its target of 450,000 permanent newcomers this year and will welcome 500,000 more in 2025.
CITATIONS:
*Canada Labour Force Survey (June)
SOURCES:
Scotiabank, Statistics Canada, CBC News
Experts in this Story:
Derek Holt, Scotiabank’s Vice President and Head of Capital Markets Economics
Douglas Porter, Chief Economist at BMO
Economist Tu Nguyen, RSM Canada
Economist Leslie Preston, TD Bank
Economists Matthieu Arseneau and Alexandra Ducharme, National Bank
Ryan Sims of The Mortgage Group
Steve Tustin is the Editor for Rentals for Newcomers and a contributing editor for Prepare for Canada. He is also the former managing editor of Storeys.com and a former senior editor at the Globe and Mail and the Toronto Star.
*Prepare for Canada did not use AI-generated content in writing this story; all sources are cited and credited where possible.
© Prepare for Canada 2024
