The unemployment rate remains at an all-time low

Canada’s economy lost 31,000 jobs in July, while analysts expected a modest 15,000 job gains. Still, the unemployment rate remained unchanged at an all-time low of 4.9%, according to data released by Statistics Canada on Friday.

Posted at 8:41 am
Updated at 4:13 p.m

Martin Vallieres

Martin Vallieres
The press

In Quebec, after falling in two of the previous three months, employment remained relatively stable in July with a fall of just 4,500 jobs. Quebec’s unemployment rate of 4.1% in July continued to hover around a record low.

In the Montreal metropolitan area, too, employment hardly changed in July and the unemployment rate remained constant at 4.7%.

In Ontario, July employment fell by 27,000 and the unemployment rate rose 0.2 percentage point to 5.3%.

The job market in Quebec and Ontario remains extremely tight. The lack of available labor probably partly explains the difficulty in sustaining growth in the total number of jobs.

Hélène Bégin, Senior Economist at Desjardins

“Despite 31,000 job losses in July, Canada’s job market has declined monthly for the second consecutive month,” report National Bank economists Kyle Dahms and Alexandra Ducharme.

“As the unemployment rate remains at historic lows, we continue to see resilience in Canada’s economy. This resilience is also confirmed by the development of average wages, which rose by more than 5% on an annual basis in July. »

salary increase

Average hourly wages for employees rose 5.2% year-on-year to $31.14 in July for the second straight month, according to data compiled by Statistics Canada.

In addition, wage increases in Quebec continued to accelerate the fastest relative to the Canadian economy as a whole.

After a 7.5% year-on-year increase observed in June, average hourly wage growth in Quebec accelerated to 8.1% in July. By comparison, Ontario wage growth was about 5% in July and June.

“This faster wage growth in Quebec shows that the labor market is overheating more than in Ontario,” emphasizes Hélène Bégin.

“The sharply accelerated inflation and the still high expectations for the coming months, together with the labor shortage, explain the increase in wages. This increases labor costs even more for companies, which also have to deal with the general rise in prices. But at this rate, will companies be able to stay on course for growth? »

outlook

“Job creation, which seems to have stalled, and strong wage growth are a cause for concern for the future,” continues economist Hélène Bégin.

Fears of a severe economic slowdown are growing, which could ease the burden on the labor market. The unemployment rate remains low for now, but is expected to rise in the coming quarters.

Hélène Bégin, Senior Economist at Desjardins

Royal Bank economist Carrie Freestone agrees that “in the coming months we will see the Canadian economy run out of steam,” as is the case in the United States.

“We’re already seeing an increase in EI claims south of the border as demand for American labor begins to cool. Canada will not be far behind,” said the Royal Bank economist.

“With the Bank of Canada’s rapid interest rate hike continuing in September to contain inflationary pressures that are still very strong, economic activity is likely to slow and the labor market to cool. Therefore, I expect the unemployment rate in Canada to increase over the next few months and into early 2023.”

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