Canada’s population boom led to a talent windfall, but the country has no idea how to use it. Statistics Canada (Stat Can) data revealed much better-than-expected job gains in August 2023. However, those job gains failed to keep up with the population growth, ultimately softening the labor market. It may get a lot worse soon, with Stat Can estimating Canada needs to add about 50k jobs per month to maintain the strength of the current market. That would imply a near-record needs to be hit every single month.
Canadian Employment Surpassed Expectations—By A Lot
Canadian employment surged past expectations, setting aside concerns the economy is too tight. The economy saw employed persons rise 0.2% (+40k) to 20.2 million in August. Growth was expected, but this was monster growth—nearly double the consensus forecast for the period.
Despite the large job gains, the positive news wasn’t enough to erode the negative indicators. The unemployment rate remained flat at 5.5% in August, following increases in the previous three months. The employment rate, the ratio of employed people to the size of the labor force, also fell 0.1 points to 61.9% last month. A combination of contrary indicators is perplexing, but it has to do with the population.
Canada’s Unemployment Rate Is Creeping Higher
The seasonally adjusted monthly unemployment rate in Canada.
Source: Statistics Canada.
Canada Needs 50k New Jobs Per Month To Maintain Employment
Canada’s booming population is growing much faster than the country’s ability to create jobs. Its economy added 40k jobs, but its population jumped a whopping 0.3% (+103k people). Naturally, the rate of people employed as a share of the working population fell.
Improving Canada’s labor market won’t be an easy task. Stat Can estimates the country needs to add 50k jobs per month for employment to remain consistent. For context, it added an average of 31k jobs per month over the past 3 months, when the impact of record stimulus remained. During more typical times, the country added an average of 38k jobs per month from 2017 to 2019.
To put it bluntly, going into softening economic data—the country needs to raise its job creation goal by 30%, compared to its performance in normal times. It’s not impossible, but it’s a heck of a corner that policymakers painted themselves into.
“Employment is still rising, but so is the unemployment rate with job demand no longer strong enough to keep up with a rising supply of workers from surging population growth,” warned Nathan Janzen, assistant chief economist at RBC, Canada’s largest bank.
“…the central bank’s move to leave the overnight rate unchanged earlier this week was based on signs that the balance of labour supply and demand was improving – and the unemployment rate holding steady after three months of increases is still likely consistent with that view for now.”
lmao. They’re oversupplying labor so home prices rise, and wages fall. Appreciate this as an employer, but it’s so cold-blooded.
Right because rapidly increasing the amount of people who need homes lowers demand for homes…
Wage growth is still unreasonably high since the excess labor is in lower income brackets. Lots of Uber drivers and Doordash delivery drivers, but still strapped for anyone that requires an intermediate skill-level.
Do people still see a future in Canada? I’m in Nova Scotia, and rental prices are now where Toronto was in 2019 (when I moved here). I’m secure with ownership (thank f&ck), but it’s been wild to see people on Toronto salaries struggling to find shacks out here.
I guess the devil is in the details ….
How many of the 40k jobs added in August are full-time, living-wage permanent positions, with benefits, pension contributions, etc.? Doesn’t matter how many jobs are added to the workforce if their compensation is insufficient to live a dignified life on one’s own (i.e. having appropriate, quality housing that doesn’t consume more than 30% of income).
And to be fair, the 103k population increase in August — were all those working-age adults, available and looking for full-time work?
Either way, the ratios are not looking good.
We need to end ALL immigration right NOW. This is going to be a mess moving forward….the cracks have begun…..so sad to see this happening to Canada.
Just have the government hire more people.
Problem solved.
Yeah, and now there’s only 3/4 of a million unfilled positions. What will we do? We absolutely must keep a million positions in companies unfilled. It’s the only way we can slow down our economy, right? Right?
Why not rewrite your headline to say “50,000 Canadian immigrants help reduce the labour shortage by 10,000 and allows Canada’s economy to grow.”
Maybe people should read that StatsCan publication… the one that says there are near 50,000 “Scientific and technical” positions unfilled, still. Dropping now, finally, but still way too high for companies trying to grow.
The Canadian immigration system is working. It’s either immigration or competition for labour, skilled or not, driving wage-inflation so high your eyes will water.