Canada will have a hard time putting a positive spin on the latest employment data. Statistics Canada (Stat Can) data shows the country added jobs in August but added 4x the volume of workers too. As a result, the unemployment rate pushed higher—especially in the country’s largest cities, which are now showing unemployment rates consistent with a deep recession.
Canada Added 20k Jobs—But Lost 40k Full-Time Roles
Canadian employment showed little change on the surface. The employed population rose to 20.54 million in August, rising 0.3% (+20k jobs) in the month. Growth is good. However, breaking down the data into the type and volume of jobs added relative to population growth, reveals a more ominous picture.
The employed population grew last month but there were fewer full-time jobs. Canada lost 44k full-time roles, and only squeezed out growth due to the 66k part-time jobs added. It’s great to add jobs, but it will be difficult for more households to make ends meet with less work and rising unemployment.
Canada Added 20k Jobs But 80k Workers
On the topic of unsustainable setups, Canada’s labor force grew by 4x the amount of jobs added last month. Just 20k were added for a whopping 80k workers (+4.3%) in August. The surplus of 60k workers helped the unemployed population hit 1.5 million last month, rising 272k people (+22.9%) since last year.
Canadian Unemployment Rate Sits Above Pre-Pandemic Levels
Source: Statistics Canada.
As a result, Canada’s unemployment rate moved substantially last month. It rose 0.2 points to 6.6% in August, which the agency called the highest rate since May 2017 (excluding the pandemic). Roughly seven years of progress rolled back really fast.
Canada’s Big Cities See Deep Recession-Style Unemployment Emerge
Most of the unemployment surge has been in Canada’s largest cities, according to Stat Can. They warn that most of the 20 largest census metropolitan areas (CMAs) now have elevated unemployment and made a sharp increase over the past year. Topping their list with the highest unemployment rate was Windsor (9.2%), where nearly 1 in 10 people in the region’s labor force are unemployed.
Not far behind were Edmonton (8.6%) and Toronto (8.0%). That last one’s going to hurt, considering the city’s massive population.
Only two markets had rates close to “full employment”—Victoria (3.3%) and Quebec (4.0%). Full employment is the lowest unemployment rate a region can have before it turns inflationary.
Canada’s Largest Cities Have Seen Unemployment Rise Sharply
Source: Statistics Canada.
An important takeaway on this last point is how elevated unemployment will impact these cities. Not just in terms of being able to support lofty real estate values and rents, but in terms of the population growth as well.
CMAs with unemployment rates above 6% will soon be excluded from Canada’s “low-wage” stream temporary foreign worker (TFW) program. Add the upcoming restrictions on student visas to that pile of data, and there’s a less-than-idea setup for the real estate industry.
Wait! What? But Justin said our economy has turned the corner and has the best growth in the G7! Sarcasm aside, these numbers are frightening. Guess 80% of GDP that was represented by gov spending and the addition of more civil servant jobs – the economy is still very broken. A soft landing ? Tiff has a perfect O for 4 record.
Poor Tiff just doesn’t have a solution either. Who cares if the inflation rate is leveling off because non-essential basket items like airfare went down a bit? Canadians are desperately trying to manage the skyrocketing cost of living increase averaging 30% on most basket items Canadians actually need to survive.
All Tiffany can do is continue to try and pull the wool over our eyes and pretend the economy is doing just fine.
From Mirriam-Webster:
Tiffany:
noun
tif·fa·ny ˈti-fə-nē
: a sheer silk gauze formerly used for clothing and trimmings
Ride the economy into the dust. Watch them all go bust. When you owe you get crushed in recessions. People who were wise always put money aside for the rainy days.
It will be interesting to see what happens with the unemployment rate in Ontario when the minimum wage goes up in Ontario on Oct 1st. Slow sales and higher wages are a perfect storm for job cuts and increasing prices. It is a vicious cycle that will be hard to break.
The good news is that CPI will come down if poor & average folks consume less, allowing interest rates to drop. Rich folks still got cash and assets. With lower interest rates (read latest BOC paper on repo market operation to support low interest rates for hedge funds) we will see the next leg up on the asset price rally like never before. Good times to come (if you got money)!
I would like to have some of that hopium you are smoking. Rich folks need the poor and average folks to buy from them or at least to live nearby so they can work for them in order for them to remain rich. There is a point after which the rich just cannot capitalize further on the poor. That threshold is known as demand destruction, the beginnings of which we see now.
There is a structural problem in the economy. Throwing more money at it is not going to solve it. This time it is the rich who will have to be forced to divest so that others can eat too. They have greedily hoarded too much housing supply creating a shortfall for the average folks.