OTTAWA – An increase in the unemployment rate in August, approaching the heels of job losses over the previous few months, suggests the economy is starting to gradual amid rising rates of interest.
The unemployment rate was 5.4 per cent in August, ticking up for the primary time in seven months, Statistics Canada reported in its most up-to-date labour power survey on Friday.
That’s up from 4.9 per cent in July, the bottom unemployment rate since comparable knowledge first grew to become obtainable in 1976.
- Download our app to get alerts to your gadget
- Get the newest newsletters proper to your inbox
BMO senior economist Sal Guatieri mentioned the economy is beginning to present some weak spot after exceptional energy in the primary half of the yr.
“The economy was doing very effectively up till a few months in the past and now appears to have hit a pothole,” Guatieri mentioned.
Overall, the Canadian economy misplaced 40,000 jobs final month in August, with the losses concentrated in the general public sector. August additionally marked the third consecutive month of declines, with a complete of 114,000 jobs misplaced over that point interval.
The report says employment features in skilled, scientific and technical companies had been offset by declines in training companies and development.
However, CIBC mentioned the lack of 50,000 jobs in training doubtless represents seasonal challenges and should reverse later.
The Bank of Canada is awaiting any developments in the economy as it raises rates of interest to quell inflation. Earlier this week, the central financial institution hiked its benchmark curiosity rate by three-quarters of a proportion level, bringing it to 3.25 per cent.
An financial slowdown is anticipated as rates of interest proceed to climb, however the financial institution has mentioned inflation remains to be too excessive for the cycle of rate hikes to finish.
“With yet one more labour power survey earlier than the (central financial institution’s) October assembly, it nonetheless appears doubtless that a minimum of yet one more rate hike will likely be in retailer earlier than a pause is seen,” CIBC senior economist Andrew Grantham mentioned in an e-mail.
The job losses in August had been primarily concentrated amongst girls aged 15 to 24 and folks between the ages of 55 to 64, whereas the labour power participation rate held regular total.
Average hourly wages in August rose 5.4 per cent in contrast with a yr in the past, up from the year-over-year improve of 5.2 per cent in July.
Guatieri mentioned the tempo of wage progress “will elevate some eyebrows” amid excessive inflation.
“That will make the Bank of Canada nervous in regards to the inflation outlook, a minimum of sufficient that we are going to see one other rate improve on the finish of October,” Guatieri mentioned, suggesting it could possibly be a half-percentage-point hike.
HSBC chief economist David Watt mentioned wanting past the headline job numbers reveals some “quirks” in the labour market. A more in-depth take a look at wage progress and employment amongst 25- to 54-year-olds suggests the labour market remains to be tight, he mentioned.
“This underlying story nonetheless suggests that there is plenty of underlying energy and momentum in the elements of the labour market which might be going to be most necessary to the Bank of Canada,” Watt mentioned.
Statistics Canada warned that employers are doubtless to proceed to face recruitment challenges as many Canadians attain retirement age. In August, 307,000 Canadians had left their job to retire in the final yr, in contrast with 233,000 a yr in the past.
The report additionally regarded on the unemployment rate amongst immigrants who arrived in Canada in the final 5 years. The unemployment rate for this group was 7.6 per cent, decrease than any August since comparable knowledge grew to become obtainable in 2006.
Still, it stays larger than the general unemployment rate in Canada.
The report additionally discovered the proportion of employees wanting to go away their job was on the rise. According to the federal company, 11.9 per cent of everlasting staff had been planning to go away their jobs inside the subsequent 12 months, virtually double the rate in January.
For low-income earners, that rate was even larger. Among employees whose common hourly wages had been in the underside 20 per cent in August, almost one in 5 say they’re planning on leaving their jobs.
The labour power survey additionally requested employees in regards to the job options they take into account to be important or essential. The high issue recognized by respondents was wage and advantages, with 85.4 per cent of them rating it crucial issue.
As extra folks head to the workplace, Statistics Canada mentioned working completely from home was declining whereas the proportion of individuals working hybrid was rising.
This report by The Canadian Press was first revealed Sept. 9, 2022.