The Canadian economy recorded a job loss for the first time since January, while the unemployment rate fell to another all-time low.
In its latest labor force survey released on Friday, Statistics Canada said the country lost 43,000 jobs in June as the unemployment rate fell to 4.9 percent.
The May unemployment rate was 5.1 percent, the lowest since at least 1976, which dates back to comparable data.
“The job market still looks very strong after looking at some of the monthly noise,” senior Bank of Montreal economist Robert Kavcic said in an email.
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Looking to the future, Kavcic said BMO expects a “significant slowdown in the economy by the end of this year.”
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The Bank of Canada is expected to raise its key interest rate on Wednesday, and most economists predict a three-quarter percentage point rise.
A recent study by the Canadian Center for Policy Alternatives warned that a rapid rise in interest rates is likely to send the Canadian economy into recession and could cause significant “collateral damage,” including the loss of 850,000 jobs. .
For now, however, CIBC chief economist Avery Shenfeld said the Bank of Canada would not be deterred from raising interest rates more aggressively, noting an increase of 1, 3 percent of hours worked and the decline in jobs offset by lower participation in the workforce.
“On its own, the fall in jobs is not yet convincing evidence of a slowdown that will deter the Bank of Canada from a 75 basis point rise next week,” Shenfeld said in an email.
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The fall in the June unemployment rate is attributed to fewer jobseekers, Statistics Canada said, while job losses were driven by a decline in self-employment by 59,000 jobs.
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For business owners, a decrease in the labor force participation rate only adds to the problems of labor shortages.
Mark Kitching, owner of the Waldo’s on King bistro and wine bar in London, Ontario, says hiring challenges are underway. He says he could hire two or three additional kitchen workers, but they don’t get applicants.
“I talked to people in my industry and we’re all having the same problem,” Kitching said.
Vacancies at Waldo’s make staff have to work overtime, which, according to Kitching, makes it more expensive and stressful.
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June also experienced a faster rate of wage growth, with average hourly wages rising 5.2% year-on-year to $ 31.24.
Kavcic said previous numbers of wage growth were lagging behind and did not capture “the reality on the ground.”
“These numbers now better reflect the conditions of the real economy,” he said.
Compared to pre-pandemic wage growth, June saw the fastest growth since comparable data collection in 1998. However, wage growth in June was still below the inflation rate. most recently, 7.7%, which was reported in May.
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Wage growth was led by earnings for non-unionized workers, which saw their wages rise by 6.1%, while unionized workers experienced a slower increase in wages by 3.7%.
Employment in the public and private sectors remains stable.
Jobs in the service-producing sector fell by 76,000, erasing the gains made earlier this year. The biggest drop in employment occurred in retail. The report said data for the coming months may help answer whether the drop was due to changing consumer behavior as inflation remains high.
Employment in the good production sector recovered, with 33,000 jobs added.
© 2022 The Canadian Press