Canada’s unemployment rate up in May
Canada’s unemployment rate up in May

Canada’s unemployment rate increased by a tenth of a percentage point last month, rising to 6.2%, according to the latest labour force survey from Statistics Canada.

While the economy added 27,000 jobs to the market, it wasn’t enough to keep the country’s overall unemployment rate from increasing. 

“A lower proportion of unemployed people transitioning into employment may indicate that people are facing greater difficulties finding work in the current labour market,” the report said.

According to the survey, of those who were unemployed in April, less than 25% found work in May, which is below the pre-pandemic average of 31.5% over the same period in 2017, 2018 and 2019. 

The Statscan labour force survey suggests that the Canadian job market has remained on its path of softening, amid high interest rates. 

While more Canadians are now working part-time, it’s not by choice, but rather as a consequence of fewer full-time options being available, with 18.2% of Canadians finding themselves in that position. 

That cohort of the labour population was only 15.4% last year, however.

“In May, the proportion of involuntary part-time workers was up on a year-over-year basis among certain demographic groups,” reads the report. “It was up 2.9 percentage points to 22.6% among women aged 25 to 54, and up 2.4 percentage points to 10.4% among women aged 55 and older.”

“In addition, a greater share of young men (aged 15 to 24) worked part-time involuntarily in May (17.7%), an increase of 5.6 percentage points compared with May 2023 (not seasonally adjusted).”

Wage growth remained strong last month with average hourly wages increasing 5.1% from a year ago, reaching $34.94. 

Employment in the health care, social assistance, finance, insurance, real estate and food service sectors all increased. 

Meanwhile, sectors such as construction, utilities, transportation and warehousing all saw a decline in employment. 

The labour force survey was published two days after the Bank of Canada decided to lower interest rates for the first time in four years based on core inflation beginning to ease. 

The central bank’s key rate was lowered from 5% to 4.75% on Wednesday.

The decision to reduce interest rates by a quarter of a percentage point reduction makes the Bank of Canada the first G7 central bank to begin its easing cycle. 

“We’ve come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the two per cent target has increased over recent months,” said Bank of Canada Governor Tiff Macklem on Wednesday. 

error: Content is protected !!