2023-06-10 05:39:08
The unemployment rate rose for the first time in nine months in Canada, which might be a first step towards an increasingly likely recession.
The labor market lost 17,400 jobs in May and the unemployment rate rose 0.2% to 5.2%, Statistics Canada reported Friday. Ontario suffered, with a loss of 24,000 jobs and an unemployment rate that jumped from 4.9% to 5.5%.
Quebec gained 1,600 jobs in May and its unemployment rate fell slightly, from 4.1% to 4.0%, very close to its historic low of 3.9%. In the Montreal region, the unemployment rate fell from 4.3% to 3.9%, the lowest rate since this regional data is compiled, that is to say since 2006.
The turnaround we’ve been waiting for
The Canadian economy has been adding jobs at a good pace since the start of the year and the unemployment rate has held steady at 5% for five months. The first rise in the unemployment rate for nine months, in May, was the turnaround that National Bank economists had been waiting for a long time.
“It was only a matter of time before a turnaround occurred following a wave of hiring,” said Matthieu Arseneau, deputy chief economist.
“The details of the report are equally grim,” he notes. Full-time employment contracted for the second month in a row”, something that had not happened for two years.
The labor market might not continue to resist the interest rate hikes which have not yet produced their full effect on the economy and the labor market.
Monthly data can be volatile, acknowledges Mr. Arseneau, but the fact that corporate profits are falling and that most SMEs say they can no longer raise wages suggests that the labor market will continue to deteriorate.
No change of course
A first increase in the unemployment rate in nine months, “it sure wakes up a bit,” says Hélène Bégin, economist at Desjardins. “But with the data of just one month, it is premature to conclude that the labor market has just changed course,” she said.
“It played out especially in Ontario, where the unemployment rate went from 4.9% to 5.5%, she explains, but where the economy is doing relatively well with the recovery of the sector. car. Employment might therefore rebound in Ontario, according to her, but not in Quebec, where the economy has lost its momentum since the start of the year.
May’s numbers might be the first crack in the job market, but Laurentian Bank economist Sebastien Lavoie believes that’s not the case. “We cannot speak of a generalized weakness in employment,” he says, pointing to the fact that employment has mainly fallen for young people aged 15 to 24, but is still progressing among 25 to 54 year olds. .
The Laurentian Bank economist, who had been one of the few to predict the key rate hike announced Wednesday by the Bank of Canada, believes that the labor market remains tight and that another rate hike will be announced in July.
Wages are still rising
The average hourly wage continues to increase at an annual rate of more than 5% in the country, which is not good news for the Bank of Canada, whose objective is to bring inflation back to the 2% target.
In Quebec, the average hourly wage is growing even faster, notes Hélène Bégin, economist at Desjardins. At 5.4%, the increase in the average hourly wage in Quebec is higher than the inflation rate of 4.8% in the province. The minimum wage was increased by $1.00 per hour on 1is May in Quebec, reaching $15.25.
On closer inspection, however, we see that the wage trend is down. “The increase in hourly wages was only 2% in Canada on an annualized basis of three months,” said Marc Desormeaux, also an economist at Desjardins.
“This measure has been hovering around 2% to 3% over the past three months, which suggests that the annual change should slow further in the second quarter,” he says.
Quebec City resists, but…
Quebec had 1,600 more jobs in May, mostly full-time jobs (+9,100) which more than offset the loss of part-time jobs (-7,600).
Job gains were in transportation and warehousing (+10,000), public administration (+10,000) and manufacturing (+4,300). Job losses occurred in business services (-8,700), information, culture and recreation (-7,700) and accommodation and food services (-3,900).
In May, there were 94,000 more jobs in Quebec than at the same date last year, underlines the Institut du Québec.
In Quebec, the unemployment rate, which had fallen to 1.7% in April, rose to 2.6% in May (three-month moving average). Despite this jump of 0.9 percentage points, the Quebec region still holds the record for the lowest regional unemployment rate in Canada.
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