Economy
Unemployment Rate in Canada Continues to Climb, Reflecting Economic Strain
Dec
Canada’s unemployment rate is on an upward trajectory, marking its second consecutive month of growth. Despite a modest increase of 24,900 working-age individuals employed in November, the unemployment rate reached 5.8%, surpassing pre-pandemic levels for the first time since January 2022, according to the latest report from Statistics Canada.
Canada’s Unemployment Amid Economic Headwinds
This uptick in the Unemployment Rate in Canada reflects the persistence of economic challenges, with the rate rising by 0.8 percentage points since April. Although it remains historically low, this figure contrasts with last year’s record-low of 4.9%.
Causes and Effects
Statistics Canada highlighted that over 66% of the unemployed in November had experienced layoffs, an increase from 63% the previous year. Additionally, approximately 31% of individuals unemployed in November, who had worked in the last year, voluntarily left their jobs—a decrease from just over 37% last year.
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Economic Headwinds
These data suggest that the Canadian economy faces significant challenges, including persistent inflation and higher borrowing costs. This offers relief to central bank policymakers ahead of the meeting, but steady wage growth implies ongoing caution is essential.
Unemployment Rate Defies Market Predictions
Market expectations were for the addition of 14,000 jobs and an unemployment rate of 5.8%. However, when applying the U.S. Labor Department’s methodology, Canada’s Unemployment Rate dipped slightly to 4.7%.
Central Bank Decisions
These labor data are crucial ahead of the decision on interest rates by the Bank of Canada next week. It will determine whether past aggressive rate hikes have effectively contained excess demand and if economic conditions are stable enough to allow inflation to decrease.
Implications and Wage Performance
Wage growth, a key concern for the central bank, remained steady in November. Average hourly wages for permanent employees increased by 5.0%, surpassing the central bank’s 2% target for inflation.
Sectoral Variations and Population Dynamics
Manufacturing, construction jobs rose; wholesale, retail, finance, real estate, leasing sectors declined in employment within the current economic landscape. The increase of 77,700 in the working-age population in November contributed to a 0.1 percentage point decrease in the employment rate, which now stands at 61.8%.