2023-09-08 20:19:41
Canada’s labor market created more jobs than expected last month, allowing the unemployment rate to remain stable as economists watch for further signs of a slowdown.
The Canadian economy created 40,000 jobs, just enough to keep the unemployment rate from rising. The overall number of new jobs was twice as large as economists expected.
The unemployment rate remained at 5.5% in August, ending a three-month streak of rising unemployment, Statistics Canada said Friday.
“The Canadian labor market has followed an up-and-down pattern this year, with poor reports usually followed by a rebound, and this month saw a slight rebound,” noted Douglas Porter, chief economist of the Bank of Montreal, in a note to its clients.
The relative strength of the employment report reinforces financial markets’ expectations that rate cuts are not imminent, and that further interest rate increases remain possible.
Nonetheless, economists tend to focus more on trends in the economy rather than a single monthly report.
“You can never just focus on one of these employment numbers because they are very volatile,” warned Andrew Grantham, director of economic research at CIBC.
“The underlying trend we are seeing over the last three to six months is still one of job growth […], but we are falling short of population growth. »
Statistics Canada also indicated that Canada’s strong population growth meant that higher monthly job creations were necessary to maintain the employment rate.
Monthly labor force surveys show that Canada’s population has increased by an average of 81,000 people each month this year. This pace of growth requires the creation of approximately 50,000 jobs each month for the employment rate to be stable, Statistics Canada said.
Employment increased in professional, scientific and technical services and construction, while jobs were lost in educational services and manufacturing.
Although last month’s employment gains do not suggest labor market weakness, the report’s details suggest that job opportunities are not as plentiful today.
The federal agency noted that the job switching rate – which represents the percentage of workers who change jobs from month to month – had declined from its peak in January 2022.
Unemployed people are also taking longer to find jobs than a year ago, as the number of vacancies declines.
Wages are still rising
The release of these latest employment figures comes days after the Bank of Canada chose to maintain its key interest rate at 5%, driven by recent data that indicates the economy is turning a corner. Notably, the latest gross domestic product report showed that the economy contracted in the second quarter.
The job market has also softened in recent months as job vacancies declined and the unemployment rate climbed.
But the central bank remains concerned about stubbornly high inflation and wants more confirmation that growth is stagnating, including in the labor market.
Friday’s jobs report does little to assuage the central bank’s concerns about wage growth, as wages rose 4.9% on an annual basis, up from 5.0%. the preceding month.
However, economists expect that slowing economic conditions will ultimately translate into lower wage increases for workers.
Regional variations
In Quebec, the unemployment rate fell by 0.2 points to stand at 4.3% in August, while approximately 14,800 jobs were created.
In New Brunswick, 1,600 jobs were created last month, but the unemployment rate jumped to 7.7%, after being 6.2% in July. In Prince Edward Island, employment increased by 1,800 in August and the unemployment rate fell to 7.6% from 8.1% in July. In Nova Scotia, the unemployment rate fell by 0.7 points to 7.0% and 3,600 jobs disappeared.
A total of 18,000 jobs were created in Alberta, where the unemployment rate fell 0.4 points to 5.7%. British Columbia also welcomed 12,000 new workers, and employment remained stable in Ontario.
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