Canada’s Unemployment Rate Remains Steady at 6.4% in July Amid Job Market Challenges.
Canada’s unemployment rate held steady at 6.4% in July, despite the economy shedding approximately 2,800 jobs, according to a report by the Financial Post.
This slight decline in employment reflects ongoing challenges in the labor market, especially for youth, recent immigrants, and part-time workers. Economists believe this weak job data could lead to further interest rate cuts by the Bank of Canada.
The wholesale and retail trade sector saw a significant loss of 44,000 jobs, while the finance, real estate, and insurance sectors lost 15,000 jobs. However, these declines were largely offset by gains in public administration (+20,000 jobs) and transportation and warehousing (+15,000 jobs), which reversed some of the losses reported in May and June.
Youth unemployment saw a concerning rise to 14.2% in July, up from 13.5% in June, marking the highest level since September 2012, excluding the pandemic period. For returning students, the unemployment rate reached 17.2%, the highest for July since 2009, excluding the pandemic, as reported by the Financial Post.
Statistics Canada attributes the increase in youth joblessness to a tougher summer job market this year. According to BNN Bloomberg, the employment rate for returning students aged 15 to 24 dropped to 51.3% in July, a decline of 6.8 percentage points compared to the previous year. This is the lowest rate for returning students in July since 1997, outside of the COVID-19 pandemic.
Recent immigrants also faced significant hurdles in the job market. Their unemployment rate jumped by 3.1 percentage points to 12.6% in July compared to the previous year. Among immigrant youth, the unemployment rate surged to 22.8% during the same period. In contrast, the unemployment rate for individuals born in Canada increased by 0.5 percentage points over the past year, reaching 5.6% in July, as reported by BNN Bloomberg.
The employment landscape in July saw a shift from part-time to full-time work, with part-time employment declining by 64,000 jobs while full-time employment increased by 62,000 jobs. However, on a year-over-year basis, part-time jobs grew at a faster pace (+3.4%) compared to full-time jobs (+1.4%), according to Statistics Canada.
Private sector employment declined by 42,000 jobs in July, while the public sector saw an increase of 41,000 jobs. Over the past year, the private sector added 86,000 jobs, whereas the public sector expanded by 205,000 jobs.
Regionally, Manitoba and Nova Scotia experienced declines in employment, losing 5,400 and 4,800 jobs respectively in July. On the other hand, Ontario (+22,000 jobs) and Saskatchewan (+6,700 jobs) saw employment gains. The overall employment rate dipped by 0.2 percentage points to 60.9% in July, continuing a downward trend observed in recent months.
Total hours worked across the country rose by 1.0% in July, up 1.9% compared to the same period last year.
The Bank of Canada has voiced concerns about the weakening job market. Governor Tiff Macklem cited these labor market challenges as a key reason for the central bank’s decision to cut its key interest rate again, aiming to stimulate economic growth, according to BNN Bloomberg.
The labor force participation rate fell by 0.3 percentage points to 65.0% in July, the lowest level since June 1998, excluding the pandemic years. The decline in participation was particularly pronounced among young men, young women, and core-aged women.
When comparing Canada to the United States, Canada’s unemployment rate, adjusted to US concepts, was 5.4% in July—1.1 percentage points higher than that of the US, as reported by Statistics Canada. The employment rate in Canada has also seen a more significant decline over the past year compared to the US.
Statistics Canada also highlighted that mothers remain more likely than fathers to prioritize childcare in their career decisions. A higher proportion of mothers reported turning down job offers, shifting to less demanding roles, or reducing their work hours in the past year.