Canada’s unemployment rate drops below 5%, the lowest in Canadian history

Statistics Canada’s Labor Force Survey for June shows that the Canadian labor market continues to tighten, making it difficult for Canadian employers to find workers.

Employment fell by 43,000 last month. This is the first job decline not associated with public health restrictions since the start of the pandemic. The fall in employment is mainly explained by the fact that a large number of people aged 55 and over are leaving the labor market.

The unemployment rate fell to a new record high of 4.9% as fewer people looked for work. The reason for the drop in unemployment was that fewer people were looking for work. The adjusted employment rate, which includes people not in the labor force but looking for work, fell to 6.8%, another record low.

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Liam Daly, an economist at the Conference Board of Canada, says amid tight labor market conditions, employment has increased among various groups such as recent immigrants and middle-aged Indigenous workers living off-reserve. In addition, the employment rate for core-aged women workers was 81.3%, slightly below the record set in May.

“These improvements suggest that labor shortages increase labor market inclusiveness by attracting workers who traditionally face underemployment or lower employment and labor market participation rates,” Daly wrote.

Service-sector employment fell by 76,000 in June, with losses spread across several industries, including retail trade. However, employment increased by 33,000 in the goods-producing sector, with gains in construction and manufacturing. Construction saw its first increase since March. According to Nikita Perevalov, economist at Scotiabank, this increase is a sign that construction is picking up, but the decline in retail trade is concerning.

“Worrying is the decline in retail and wholesale employment (-61,000 net jobs), which may be evidence of lower spending due to worker fatigue. consumers, with high price inflation translating into fewer jobs in the sector, » Perevalov wrote.

The tight labor market has pushed up wages in Canada. In June, the average hourly wage rose 5.2% to $31.24 year over year.

« A very tight labor market leads to stronger wage growth, which will help partly offset the erosion of real incomes by inflation, » wrote Rishi Sondhi, an economist at TD Bank.

One way to help support labor shortages is to welcome high numbers of immigrants with skills that meet talent demands. In 2022, Canada is expected to open its doors to a record 431,645 new permanent residents. Canada is currently on track to achieve this goal. In the first half of 2022 alone, Canada has already welcomed approximately 200,000 new permanent residents.

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