(OTTAWA) Canada’s unemployment rate was 5.4% in August, the first rise in seven months as the economy begins to slow.
Posted at 8:37
Updated at 2:17 p.m
The economy lost 40,000 jobs over the past month, Statistics Canada said in its latest labor force survey on Friday. Losses were concentrated in the public sector.
The unemployment rate in July was 4.9%, the lowest since comparable data became available in 1976.
Employment fell in British Columbia, Manitoba and Nova Scotia but increased in Quebec. In addition to the 27,000 jobs created in the province – all part-time – more Quebecers were looking for work and the unemployment rate was measured from 0.4 percentage point to 4.5%.
The other provinces showed little change.
August marked the third straight month of job losses in Canada. Bank of Montreal economist Sal Guatieri said the economy is beginning to show some weakness after being remarkably strong in the first half.
The economy was doing very well until a few months ago, but now it seems to have hit a snag.
Sal Guatieri, economist at the Bank of Montreal
According to Statistics Canada, job gains in professional, scientific and technical services were offset by declines in education services and construction.
CIBC found that the loss of 50,000 jobs in the education sector likely reflects seasonal hardship and could reverse later.
The Bank of Canada attentive
The Bank of Canada is monitoring all developments in the economy while conducting a campaign to raise interest rates to curb high inflation. An economic slowdown is expected as interest rates continue to rise.
“While another Labor Force Survey is due to be released ahead of the October meeting [de la banque centrale]it still seems likely that at least one more rate hike is expected before a pause is observed,” CIBC economist Andrew Grantham said in an email.
Job losses were mostly concentrated in women aged 15 to 24 and people aged 55 to 64, while the overall labor force participation rate remained stable, Statistics Canada said.
Average hourly earnings rose 5.4% in August from the same month last year, showing an acceleration from July’s 5.2% annual increase.
Guatieri said the pace of wage growth will “raise some eyebrows” amid high inflation.
“This will make the Bank of Canada nervous about the inflation outlook, at least enough that we face another rate hike in late October, probably by 50 basis points,” Ms Guatieri.
Statistics Canada has warned that employers are likely to continue to face hiring challenges as many Canadians reach retirement age. As of August, 307,000 Canadians had left work to retire at some point in the past year, up from 233,000 a year earlier.
The report also looked at the unemployment rate for immigrants who came to Canada over the past five years. That rate was 7.6%, lower than any August since comparable data became available in 2006.
The report also revealed that the percentage of workers wanting to leave their jobs was increasing. According to the federal agency, 11.9% of permanent employees planned to leave their jobs in the next 12 months, almost twice as many as in January.
The Labor Force Survey also asked workers which job characteristics they considered essential or very important. The factor most frequently cited by respondents was salary and benefits, with 85.4% ranking this as the most important factor.
As more people return to the office, Statistics Canada has observed that working from home alone is decreasing while the proportion of people working in hybrid ways is increasing.