Unemployment rate climbs in Calgary as population surges

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The unemployment rate in Calgary has been climbing as a wave of newcomers flock to the city, outpacing the creation of new jobs — even as employment numbers remain stronger than in the rest of the country.

Calgary’s three-month average jobless rate ending in June rose to 8.5 per cent from 7.1 per cent last year, a statistically significant jump according to Vincent Ferrao, an analyst with Statistics Canada. The three-month average in the city tracks higher than the provincial monthly unemployment rate of 7.1 per cent in June.

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The participation rate in Calgary rose by 0.4 percentage points to 72.6, which is more than seven and three percentage points higher than the national and provincial averages, respectively. It reflects the creation of more than 30,000 jobs in the city in a year. Meanwhile, the province added over 67,000 jobs, of which more than 23,000 were full-time and 43,000 were part-time.

The rate of employment and participation in the province both fell by 0.1 percentage points. The numbers are still the highest in the country, but the gradual decrease signals that the population is outstripping the economic boom in Alberta, and the province is slowly on a path to converging with the rest of the country, said Charles St. Arnaud, chief economist at Alberta Central.

It also explains why the labour participation rate is declining even as the province adds more jobs.

“People who move to Alberta might have kids of working age but are in school, so those will increase the population but not the labour force,” said St. Arnaud.

To balance this equation, he said the province must add more jobs.

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Most of the growth in jobs has occurred in the service sector, with food and accommodation posting more than 20,000 positions in a year.

Natural resources, which mainly comprise oil and gas, grew by more than 25,000 jobs. Meanwhile, professional, scientific and technical services lost more than 6,000 jobs. Construction bled 13,000 positions, and the wholesale and retail sector drained more than 32,000 jobs.

The trend in the province aligns with that of Calgary, where the highest number of jobs were added in the food and accommodation sector with more than 12,000 new positions. More than 4,000 people found employment in natural resources, while professional, scientific and technical services lost more than 6,400 jobs.

However, such increases in employment don’t compare with the surge in population. “The size of the population growth is unprecedented — like we’ve never seen,” St. Arnaud said.

The labour force in the province grew by 4.7 per cent from last year, amounting to more than 176,000 people. In contrast, the number of new jobs is only 38 per cent of new workers in the province.

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“To keep the employment rate stable, we need to create 114,000 jobs over the course of 12 months,” St. Arnaud said. “That’s about 10,000 jobs per month and, currently, we’re running at a bit less than 6000 jobs a month.”

There is also the issue of the quality of new jobs.

Almost two-thirds of new employment was part-time, while a majority of new positions were offered by the hospitality sector. Such data raises questions about whether newcomers are being offered jobs they’re qualified for. However, the labour force survey doesn’t answer these questions, said St. Arnaud.

“The data doesn’t allow us to get some precision on that,” he said. “You need to do a survey of those who have recently moved to Alberta — what kind of job they’ve managed to find in Alberta.”

The data will, however, influence monetary decisions by the Bank of Canada. A rise in the country’s unemployment rate to 6.4 per cent may convince the bank to cut its interest rate, economists say.

“The Bank of Canada is not out there to see Canadians lose jobs, but they do want to see, you know, slightly cooler conditions in the labour market,” said Leslie Preston, managing director and senior economist at TD Bank.

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“So, this is certainly consistent with what they’re looking for.”

The central bank cut its key interest rate last month for the first time since the early days of the pandemic to 4.75 per cent.

Preston said TD still forecasts that the Bank of Canada would wait until September before dropping the rate again, although she noted two key data points that could influence the move: the central bank’s quarterly business outlook survey and the June inflation report.

“Certainly, inflation will be a big one, but I wouldn’t want to downplay the business outlook survey,” Preston said.

“That’s also a pretty important one.”

— With files from Canadian Press. 

hmansukhani@postmedia.com

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