Statistics Canada has reported that the unemployment rate in Canada reached seven percent in May, the highest level in nine years, excluding the pandemic.
The data agency reports that the unemployment rate has reached its greatest level since 2016, with the exception of the high unemployed rates observed in 2020 and 2021, in its most recent Labour Force Survey.
Statistics Canada also stated that there has been “virtually no employment growth” since January, following substantial gains in the autumn.
The economy experienced minimal change from April, adding only 8,800 positions during the month.
In May, the private sector experienced its first increase in employment since the beginning of the year, while the public sector experienced a decline in employment as a result of the conclusion of the federal election period, which intensified seasonal hiring.
A 58,000 increase in full-time positions was counterbalanced by a 49,000 decrease in part-time positions.
Leading the way in job growth were wholesale and retail trade, which added 42,800 positions, and the information, culture, and recreation sector, which gained 19,300 positions.
The public administration sector experienced a reduction of 32,200 positions.
After losing 31,000 positions in April, manufacturing, which is one of the sectors most susceptible to tariff-related job losses, shed an additional 12,200 jobs in May.
“In general, our ranking assigns this report a passing grade, primarily as a result of the report’s strength in the private sector and full-time employment. However, the persistent increase in the unemployment rate serves as a stark warning,” stated Douglas Porter, chief economist at BMO.
“The primary point is that the labor market is still experiencing slack, which implies that the Bank of Canada may not have completed its rate cuts just yet.”
The central bank’s subsequent interest rate determination is scheduled for July 30.
In May, the data agency reported that the number of unemployed individuals in Canada had increased by 13.8% from the same period last year, totaling 1.6 million.
In comparison to the same period in other comparable years, a lesser proportion of individuals who were unemployed in April, when the unemployment rate was 6.9 percent, found employment in May.
“This suggests that individuals are encountering more significant challenges in securing employment in the current labor market,” the agency stated.
Porter noted in his note to clients that “we have transitioned from a situation in which it was challenging to locate workers in 2022 and 2023 to one in which it is difficult to locate work today.”
In contrast to the previous year, when the average was 18.4 weeks, the time that unemployed individuals spent searching for employment increased to 21.8 weeks, or approximately five months.
In the interim, the summer employment market is presenting a difficult start for young people.
The jobless rate for pupils returning to school in the fall also increased year-over-year to 20.1%, a 3.2 percent increase from last May.
In comparison to the same period last year, the average hourly wage increased by 3.4%, or $1.20, to $36.14, which is consistent with the rate of growth observed in April.
