Canada’s unemployment rate keeps falling, job growth slows down
The national labor market slowed down even as the unemployment rate reached a new record low level, pushed by a lack of new employees.
According to Statistics Canada, the economy added 15,300 jobs last month, while economists expected 40,000 new positions. Such a small gain put a stop to a previous activity hike of two months during which Canada created almost 410,000 jobs.
The jobless rate was down to 5.2%, marking the lowest number since 1976, as the economy couldn’t produce new growth in the labor force.
As the employment already exceeds pre-pandemic levels, economists have been expecting a slowdown in job creation as Canada faces difficulties with finding new workers. The imbalance between demand and supply is one of the reasons the BoC is tightening its monetary policy. Canada’s economy added about 1 million jobs during the past year, and the employment now is almost half a million above February 2020 levels.
“It means that we’re close to a mature stage in the economic cycle,” – Josh Nye, a senior economist at RBC, noted. “It will be difficult to produce job increases on the scale that we’ve got used to in the past year.”
Concerns over Canada’s economy being already up against capacity are intensifying predictions that the central bank will keep raising interest rates in coming months, including a 0.50% hike in June. As you know, the BoC has raised its policy rate by 0.75% to 1% since March, and now traders predict a 2% increase until the end of 2022.
In April, Canada’s labor-force participation rate fell to 65.3%. One more sign of a tightening market is the fact that part-time employment went down to a record low level of 15.7%.
Average hourly wages rose by 3.3% from a year earlier, following February’s 3.4%. Canada lost 31,600 full-time jobs last month, which was more than offset by a 47,100 gain in a part-time segment.
The largest drops were seen in the construction sector (down by 20,700 jobs). Meanwhile, service-related industries showed a 31,400 increase.