Canada added 22,000 jobs, but students and immigrants saw sharp increases in unemployment
Canada’s unemployment rate increased to 6.6 percent in August, as the job market slowdown affects workers and job seekers differently, according to BNN Bloomberg.
Statistics Canada’s labour force survey showed a modest gain of 22,000 jobs, failing to keep up with population growth. This follows a rise from 6.4 percent in July.
Employment increased in educational services, health care, social assistance, finance, insurance, real estate, rental, and leasing. However, there were declines in the other services category, as well as in professional, scientific, and technical services, utilities, and natural resources.
The job market has been impacted by high interest rates, with students and recent immigrants bearing the brunt of these challenges.
Students returning to school faced a particularly difficult summer job market, with unemployment for this group reaching its highest level since the summer of 2012, excluding 2020. From May to August, the student unemployment rate averaged 16.7 percent, up from 12.9 percent in the same period last year.
“Much of the unemployment rate increases to-date have come from longer job searches for new labour market entrants (particularly students), but layoffs are also rising under the surface,” wrote RBC assistant chief economist Nathan Janzen in a client note.
Unemployment rates for Black, Chinese, and South Asian students were significantly higher. Black students faced the highest unemployment rate, reaching 29.5 percent, up 10.1 percent from summer 2023.
This rise in unemployment coincides with the Bank of Canada’s recent third consecutive interest rate cut, with more cuts likely. Governor Tiff Macklem acknowledged that economic growth needs to recover as the job market continues to slow.
The number of unemployed people grew to 1.5 million in August, marking a 22.9 percent increase from the same month last year. Among those unemployed in July, 16.7 percent transitioned to work by August, a smaller share compared to August 2023.
“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,” said Janzen.
Despite the slowdown in hiring, wage growth remains strong. Average hourly wages rose five percent year-over-year, reaching $35.16.
However, recent immigrants experienced flat wage growth, with those who arrived in the past five years seeing a 1.3 percent decrease in wages. In contrast, more established immigrants and Canadian-born workers experienced wage increases of 6.3 percent and six percent, respectively.
