MNI: Canada Jobless Rate Highest Since 2017 Excluding Pandemic
Canada's unemployment rate rose to the highest since 2017 excluding the pandemic as hiring continued to lag population growth fueled by record immigration, adding to the central bank's view it likely needs to keep cutting interest rates as the economy disappoints in the second half of the year.
Statistics Canada said Friday the jobless rate climbed to 6.6% from 6.4%, taking the increase since April of last year to 1.5 percentage points. Employment rose by 22,100 after two prior declines, but that was far short of the 82,500 growth in the labor force. The jobless rate and employment were in line with the forecasts of economists. Many investors predict the Bank of Canada will add to its three rate cuts this year at the remaining two meetings for 2024 and at several others next year as it takes borrowing costs back towards neutral.
Other signs the job market has moved well away from historic strength after the pandemic rebound include the 23% increase in the number of unemployed people over the last year and the highest jobless rate outside of the pandemic for returning students since 2012. Weakness has been a consistent trend, with job growth over the last year of 317,000 lagging labor force expansion of 589,000. Such weakness has forced the government restrict immigration and added to voter anger about a weak economy now threatening an early end to Justin Trudeau's minority government-- the NDP this week ended a deal to support the Liberals on confidence votes.
The job report was also consistent with a recent flash GDP report showing the economy stumbled into the third quarter, with hours worked down 0.1% in August from July, and up a modest 1.4% from a year earlier.
Just as the Bank has said the path back to stable inflation next year will have some bumps, the Labour Force Survey showed continued wage gains of around 5%. Still, Senior Deputy Governor Carolyn Rogers on Wednesday told reporters that while wage gains aren't consistent with stalled productivity, there's little sign wage demands are feeding into consumer prices. The last CPI report showed a moderation to a three-year low of 2.5%.
The margin of error around Statistics Canada’s employment figure is 32,300, meaning the specific job shift reported today isn’t significantly different from zero. The agency said it's the fourth straight month without a significant job gain. The composition of August's total was also weak, with full-time jobs falling by 43,600 and lower-paid part-time staffing up 65,700.