The unemployment rate remains at a historic low

The Canadian economy lost 31,000 jobs in July, while analysts expected a weak addition of 15,000 jobs. However, the unemployment rate remained unchanged at a historic low of 4.9%, according to data released Friday by Statistics Canada.

Updated yesterday at 4:13 pm.

Martin Valeris

Martin Valeris
Journalism

In Quebec, after falling for two of the previous three months, employment remained practically stable in July, with a drop of only 4,500 jobs. The unemployment rate of 4.1% in July in Quebec continued to hover around a record low.

Also in the Montreal metropolitan area, employment changed little in July and the unemployment rate settled at 4.7%.

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

The job market in Quebec and Ontario is still very tight. The lack of available workers may partly explain the difficulty in maintaining growth in the total number of jobs.

Helen Begin, Senior Economist at Desjardins

“Although it lost 31,000 jobs in July, for the second time in a row, the Canadian labor market is not declining,” say economists Kyle Dahams and Alexandra Ducharme at the National Bank.

“With the unemployment rate remaining at a historic low, we continue to see resilience in the Canadian economy. This resilience was also confirmed by the trend in average wages, which was still up more than 5% YoY in July.”

Salary increase

According to data compiled by Statistics Canada, for the second month in a row, average hourly wages for employees rose 5.2% year-on-year in July to $31.14.

Moreover, wage increases in Quebec have continued to accelerate further compared to the Canadian economy as a whole.

After the 7.5% jump observed in June, in the annual variance, the increase in average hourly wages in Quebec in July accelerated to 8.1%. By comparison, in Ontario, wage growth held steady at around 5% in June and July.

Helen Begin notes that “this faster wage growth in Quebec shows that the labor market is more overheated than it is in Ontario.”

“The sharp acceleration in inflation and still-high expectations for the coming months combine with a labor shortage to explain the rise in wages. Labor costs are therefore rising more quickly for companies, which also have to deal with the general rise in prices. But at this rate, will you enjoy Companies with the ability to continue their growth trajectory? »

prospects

Economist Helen Begin continues: “Job creation, which appears to have stalled, and robust wage growth raise some concerns about the future.”

Fears are growing of a sharp economic slowdown, which could ease some pressure on the labor market. The unemployment rate is still low at the moment, but an increase is expected in the coming quarters.

Helen Begin, Senior Economist at Desjardins

At Royal Bank, economist Carrie Friston also sees “we’re going to start seeing the Canadian economy run out in the coming months,” like what’s happening in the United States.

“We are already seeing an increase in emotional intelligence claims south of the border as the demand for US labor begins to subside. Canada will not be far behind,” according to the Royal Bank economist.

“With the rapid rate hike by the Bank of Canada, which will continue in September, in order to curb very strong inflationary pressures, the economy should slow down and the labor market should calm down. So I expect the unemployment rate in Canada to start rising over the next few months and into early year 2023″.



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