Canada’s unemployment rate stayed a historic low of 4.9 per cent in July, remaining unchanged from June as the country continues to face a labor shortage.
In its latest labor force survey, Statistics Canada says the economy lost 31,000 jobs, marking the second consecutive month of job losses.
The number of public sector employees fell, while the number of self-employed workers rose. There was little change in the number of private sector workers.
Canada’s labor market remains exceptionally tight, with over one million job vacancies across the country. The unemployment rate is the lowest on record with comparable data going back to 1976.
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“The most important thing for Canadians to bear in mind is the unemployment rate today was confirmed to be at 4.9 per cent that is a historic low for Canada and that is good news for Canadians,” Deputy Prime Minister and Finance Minister Chrystia Freeland told reports. in Nova Scotia Friday.
“Our big economic challenge when it comes to the labor market is a shortage of workers.”
Statistics Canada says despite the labor shortage, there is no evidence of a rise in the proportion of people leaving or switching jobs.
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CIBC senior economist Andrew Grantham noted that the job losses in July were concentrated in the services sector, including wholesale and retail, education and health in a note on Friday morning.
“With some of those sectors reporting high vacancy rates, labor supply rather than demand appears to be the main issue,” Grantham said.
The labor participation rate for Canadians between the ages of 25 and 54 is relatively unchanged from where it was pre-pandemic.
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The pace of wage growth also held steady compared with June, with average hourly wages rising 5.2 per cent year over year.
The Statistics Canada report also looked at the ongoing healthcare worker shortage, with a focus on nurses. According to Statistics Canada, more than one in five nurses worked paid overtime hours in July, the highest level since data became available in 1997.
For comparison, about 10 per cent of all other employees worked overtime in July.
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As Canada faced the seventh wave of COVID-19 infections, 11.2 per cent of nurses were off sick for at least part of the week when the labor force survey was conducted.
The Bank of Canada is paying close attention to employment levels in the country as it gears up to make its next key interest rate announcement in September, when it’s expected to raise interest rates once more.
While economic growth slows in the country as the central bank attempts to tame inflation with higher interest rates, economists have noted that the tight labor market makes the slowdown unique in its nature.
US unemployment drops to 3.5%
Meanwhile, America’s hiring boom continued last month as employers added a surprising 528,000 jobs despite raging inflation and rising anxiety about a recession.
July’s hiring was up from 398,000 in June. The unemployment rate slipped to 3.5 per cent.
The US economy shrank in the first two quarters of 2022 — an informal definition of recession. But most economists believe the strong jobs market has kept the economy from slipping into a downturn.
The American job market has repeatedly defied skeptics this year. Economists had expected only 250,000 new jobs this month.
— with files from the Associated Press and Global News
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