Employment fell for both core-aged men and women in August, with steeper declines for men. (Photo by J. Countess/Getty Images) · J. Countess via Getty Images
Canada’s labour market shed a net 65,500 jobs in August and the unemployment rate jumped to 7.1 per cent, according to Statistics Canada data released on Friday.
The unemployment rate is now at its highest point outside of the pandemic since May 2016, and has risen 0.5 percentage points since the start of this year.
Economists’ generally agreed that the report increases the odds of the Bank of Canada (BoC) cutting interest rates, but differed on their forecasts around the timing and depth of cuts.
In a note published following the data release, Desjardins Group economist Royce Mendes said the “ugly employment numbers” should persuade more observers that the BoC needs to reduce interest rates sooner rather than later. Desjardins expects a 25 basis point cut at the BoC announcement on September 17 and further cuts to bring the rate down to 2.0 per cent from the current 2.75 per cent “to stem the bleeding in the economy.”
BMO chief economist Douglas Porter acknowledged the “weak” report but argued that the details “were not quite as dire as the headline results.” Hours worked went up slightly, he noted, and could be positive for the quarter, “suggesting that the economy may still have ground out a tiny gain in Q3.”
“All told, this weak report fully reinforces any bias for the BoC to ease somewhat further here, but inflation hasn’t quite given them the all-clear,” Porter wrote. “The upcoming CPI report (on Sep. 16) lands a day ahead of the next BoC meeting, and it looms large.”
CIBC Economist Andrew Grantham wrote that the “further slump” in employment should result in a September cut, “with another to follow in Q4.”
Economists had expected the Canadian economy to add 10,000 jobs in August and the unemployment rate to rise to 7.0 per cent, according to consensus estimates published by the Bank of Montreal.
Statistics Canada noted the layoff rate was 1 per cent, up from 0.9 per cent a year earlier, and only 15.2 per cent of those seeking work in July had found a job in August, a proportion significantly lower than the pre-pandemic average of 23.3 per cent from 2017 to 2019.
The job losses were largely in part-time work, with a net decrease of 60,000 positions. Full-time employment, which had recorded a loss of over 50,000 jobs the month before, was little changed. Jobs for youth were similarly steady following a major drop in July, but positions for core-aged (25-54 years old) men and women fell a net 58,000 and 35,000 respectively.
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