Jobless rate rises by more than anticipated in August
Canada’s unemployment rate rose by more than expected last month, spiking to 6.6% amid a continuing cooldown in the overall economy.
Statistics Canada said on Friday that the labour market added a net 22,100 jobs in August, below expectations of economists surveyed by Reuters, with the unemployment rate coming in 0.1% higher than those observers had estimated.
August saw a substantial dip in full-time employment, which fell by a net 43,600, as gains in part-time work helped offset that drop. The economy added a net 65,700 part-time jobs in August – but StatCan highlighted that the unemployment rate has “generally trended up” since April of last year.
Outside of the COVID-19 pandemic, when the economy ground to a halt and a sizeable percentage of the national workforce was laid off, the unemployment rate is now higher than it’s been since May 2017.
Royal Bank of Canada (RBC) assistant chief economist Nathan Janzen highlighted that younger workers are bearing the brunt of layoffs, with around three-quarters of the increase in the unemployment rate from post-pandemic lows impacting workers under 35.
Wage growth also slowed in August, sliding to 5.0% compared with a 5.2% reading in July and 5.4% in June, and Janzen said a downward trend in job openings suggested that hiring demand was continuing to diminish.
The Bank of Canada cut its benchmark rate by 25 basis points on Wednesday, the third successive decision it’s trimmed rates – and the latest employment data signals further reductions are on the way, according to Janzen. “From the Bank of Canada’s perspective, higher unemployment coupled with persistent declines in per-capita GDP will reinforce that inflation will continue to drift lower and clearly argues for further interest rate cuts from what are still elevated levels,” he said.
“We continue to expect the BoC to cut the overnight rate for a fourth consecutive decision point next month.”
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