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Canadian Unemployment Still Climbing As Population Outpaces Jobs 3x – Better Dwelling

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7 months ago

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Canadian Unemployment Still Climbing As Population Outpaces Jobs 3x – Better Dwelling

Canada’s labor market continues to add jobs, but not nearly enough to keep it from falling behind. Statistics Canada (Stat Can) released the latest Labor Force Survey (LFS) showing employment grew in May. The same data shows the growth was just a third of what was needed to accomodate its rapid population growth. As a result, the unemployment rate climbed higher as tens of thousands of workers were added to the tally of those looking for a job.

Canada Gains Jobs, But It’s Losing Full-Time Employment

Canada continues to add jobs to its economy, avoiding a contraction for now. Employment rose 0.1 points (+27k jobs) to 20.5 million in May. Part-time jobs didn’t just dominate, rising 1.7% (+62k jobs); they were making up for the 0.2% decline (-36k jobs) that full-time employment made. 

It’s a trend that was generally consistent over the past year as labor markets loosen. Canada saw the number of jobs rise 2.0% (+402k) over the past year. Breaking that down, part-time jobs (+3.8%) grew more than double the rate of full-time (+1.6%). That also brings up the involuntary part-time rate, which climbed to 18.2% as nearly 1 in 5 part-time workers fail to find full-time employment. 

Canada’s Population Growth Is 3x Its Job Creation Rate

By itself the growth may sound impressive, but not when contrasted with the country’s population growth. Canada’s 15+ working-age  population surged 0.3% (+97.6k) last month, 3x the rate of employment added. Over The past year, the working-age population has climbed a record 3.4% (+1.1 million), meaning just 1 job was added for every 3 workers.  

Canadian Unemployment Rate Now Higher Than Pre-2020

The seasonally adjusted rate of unemployed Canadians.

Source: Statistics Canada.

Canadian Unemployment Climbs To Nearly 1.4 Million People

Adding jobs at a third of the rate of people has naturally led to rising unemployment. The unemployment rate climbed 0.1 points (+27.7k people) to 6.2% in May, about 0.9 points (+250k people) higher than last year. Roughly 1.37 million people are now unemployed, with another 692k underemployed. That doesn’t include full-time students, who can be statistically considered employed but not unemployed, since they can’t technically be ready, willing, and able to work as required by the survey. 

Coincidentally, the country’s largest bank noted Canada’s soaring student population. It appears finding work while in school isn’t just a problem; it’s also problematic to find work once students have concluded their studies. 

“A disproportionate share of the rise in the unemployment rate is still coming from students that are entering the job market for the first time and taking longer to find work, although the number of permanent layoffs was also up 33% year-over-year in May,” explains Nathan Janzen, assistant chief economist at RBC. 

That’s right, climbing permanent layoffs. 

Ultimately, this all boils down to a rapidly loosening job market. The general guideline is that an unemployment rate rising more than 0.5 points will trigger a recession. Canada’s is currently at 0.9 points, nearly double that level. The country is already in a per-capita recession, but the aggregate growth is obfuscated by adding demand via excess population growth.

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