July's job market saw youth and recent immigrants facing higher unemployment amid economic challenges
Canada’s unemployment rate held steady at 6.4 percent in July, with the economy shedding approximately 2,800 jobs, as reported by the Financial Post.
This soft reading, which economists suggest could pave the way for continued interest rate cuts by the Bank of Canada, reflects a challenging labour market, particularly for youth, recent immigrants, and part-time workers.
Employment fell in the wholesale and retail trade sector by 44,000 jobs and in finance, real estate, and insurance by 15,000 jobs. However, job gains were observed in public administration (+20,000) and transportation and warehousing (+15,000), which mostly offset losses reported in May and June.
The youth unemployment rate rose to 14.2 percent in July, up from 13.5 percent in June, marking the highest level since September 2012, excluding the pandemic years.
Among returning students, the unemployment rate reached 17.2 percent, the highest level for July since 2009, excluding the pandemic, as reported by the Financial Post.
Statistics Canada attributes the high level of youth joblessness to a more difficult summer jobs market this year.
As per BNN Bloomberg, the employment rate for returning students aged 15 to 24 was 51.3 percent in July, down 6.8 percentage points from the previous year.
Statistics Canada notes that this is the lowest employment rate for returning students in July since 1997, outside of July 2020 during the COVID-19 pandemic.
Recent immigrants also faced significant challenges in the labour market, with their unemployment rate jumping by 3.1 percentage points to 12.6 percent in July compared to the previous year. Among immigrant youth, the unemployment rate surged to 22.8 percent during the same period.
In comparison, the unemployment rate for people born in Canada rose by 0.5 percentage points over the last year to 5.6 percent in July, as reported by BNN Bloomberg.
Employment in July saw a shift from part-time to full-time work, with part-time employment declining by 64,000 jobs and full-time employment increasing by 62,000 jobs.
However, on a year-over-year basis, part-time jobs grew at a faster pace (+3.4 percent) compared to full-time jobs (+1.4 percent), according to Statistics Canada.
Private sector employment declined by 42,000 jobs in July, while public sector employment increased by 41,000 jobs. Over the past year, the private sector added 86,000 jobs, while the public sector saw an increase of 205,000 jobs.
Regionally, employment declined in Manitoba (-5,400) and Nova Scotia (-4,800) in July, while Ontario (+22,000) and Saskatchewan (+6,700) saw increases. The overall employment rate fell by 0.2 percentage points to 60.9 percent in July, continuing a downward trend observed in recent months.
Total hours worked rose by 1.0 percent in July and were up 1.9 percent compared with 12 months earlier.
The Bank of Canada has expressed concern about the deteriorating job market conditions. Governor Tiff Macklem cited the labour market challenges as a factor in the central bank's decision to cut its key interest rate again, aiming to boost economic growth, according to BNN Bloomberg.
The labour force participation rate fell by 0.3 percentage points to 65.0 percent in July, the lowest since June 1998, excluding the pandemic years, as per Statistics Canada. The decline in participation was particularly notable among young men, young women, and core-aged women.
In comparison with the United States, the unemployment rate in Canada (adjusted to US concepts) was 5.4 percent in July, 1.1 percentage points higher than in the US, as reported by Statistics Canada.
The employment rate in Canada has also trended down over the past year, with a larger decline than that observed in the US.
Statistics Canada highlights that mothers remain more likely than fathers to prioritize childcare in their career decisions, with a higher proportion of mothers turning down job offers, changing to less demanding positions, or reducing their work hours in the past year.
