In July, Canada’s unemployment rate remained unchanged at 4.9 percent, reflecting the all-time record from the previous month.
In July, the overall unemployment rate remained constant at one million. Moreover, 426,000 persons expressed a desire for employment but did not actively seek one, thereby failing to meet the criteria for being classified as unemployed. For the sixth month running, there wasn’t much of a change. While comparative data have been available since 1997, the normalized unemployment rate—which accounts for this source of potential labor supply—has stood at 6.8 percent, the lowest ever.
Additionally, Statistics Canada reports that the loss of 31,000 jobs in the Canadian workforce was not a major change in employment. Approximately 74,000 jobs were lost in Canada between May and July, but more than one million jobs were added between May 2021 and May 2022.
However, July represents the second month in a row that employment in Canada has fallen. Canada still has a tight labor market despite its record-low unemployment rate and more than a million open positions.
In an economic update, RBC economist Carrie Freestone states that “two consecutive months of decreasing employment shows that the Canadian labor force is climbing up against capacity limitations, with little potential for positive improvement.” Despite a decline in job postings, there are still a lot of open positions that need to be filled, and there aren’t many jobless Canadians who are qualified to fill them. Demand for employees is still quite high.
The number of people employed in the public sector decreased by 51,000 (1.2 percent) in July, representing the industry’s first decrease in a year. Ontario and Quebec saw the greatest concentration of the decline. Considering the month-over-month decrease, there was a 5.3 percent (+215,000) increase in public labor force participation since July 2021.
Following a decline of 59,000 (-2.2%) in June, there were 34,000 (+1.3%) more self-employed people in July. Nevertheless, despite this growth, self-employment was still 214,000 (-7.4%) behind its pre-pandemic February 2020 level. It also showed no sign of year-over-year growth.
In the month of July, employment in the sector that provides services decreased by 53,000 (-0.3%). Losses in this industry were primarily caused by wholesale and retail trading. The number of individuals employed in the wholesale and retail sectors decreased by 27,000 (-0.9%) in July, marking the second consecutive monthly reduction. The majority of the net drop was contributed by the province of Ontario and Quebec.
According to CIBC’s Andrew Grantham, cutbacks were unusually weighted in the services industry, which includes wholesale and retail, education, and health. “With several of those industries reporting significant employment growth, the major problem seems to be labor supply rather than desire. Nevertheless, the unanticipated slowdown in pay growth between today’s report and last month’s is the main distinction.
In July, the average hourly wage for workers increased by 5.2 percent (+$1.55 to $31.14) over the same period last year, which corresponds to about the same pace of growth (+5.2%; +$1.54) as in June. The hourly average salary increased at a similar rate for both part-time (+5.0%; +$1.05) and full-time (+4.9%; +$1.52) workers for the second consecutive month. When tried to compare to part-time workers, full-time employees’ wages grew at a faster rate later in 2022.
According to the latest figure on inflation, the Index of Consumer Prices increased by 8.1% over the preceding year in June, the highest yearly increase in almost 40 years.