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London’s unemployment rate went up by half a percentage point for a second straight month in May, Statistics Canada reported Friday, as the Canada-U.S. trade war continues to take a toll on the local economy.
A Statistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. (THE CANADIAN PRESS/Sean Kilpatrick)
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London’s unemployment rate went up by half a percentage point for a second straight month in May, Statistics Canada reported Friday, as the Canada-U.S. trade war continues to take a toll on the local economy.
The London region, which also includes St. Thomas, Strathroy and portions of Elgin and Middlesex counties, shed 1,700 jobs last month, the federal agency’s latest snapshot of the local labour market showed.
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That puts the job losses during the past two months at 3,500 positions and the region’s jobless rate at 6.9 per cent.
David Ristovski, an economist with the Conference Board of Canada, described the pace of job losses for the London market as “significant.”
“It is a reflection on what’s been happening with the trade situation between the United States and Canada,” he said.
“Trade policy is creating a cloud of uncertainty, which is eroding business confidence, and besides disrupting global trade flows, tariffs are driving shifts in consumer behaviour as well.”
The poor performance locally was expected as the impact of tariffs continues to trickle into the local economy, especially since Statistics Canada uses a three-month average to report labour figures for metropolitan areas such as London. That means it takes some time for major economic shocks to be reflected in the local numbers.
It also means more job losses could be possible in the coming months given the export-oriented nature of the London region, and its status as part of the heart of Canada’s automotive sector.
“The biggest concern is the prolongation or even escalation of the trade situation with the United States,” Ristovski said. “That will undoubtedly have a negative impact on the local economy.”
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Ristovski noted manufacturing – which represents about 13 per cent of the London economy – is a particularly vulnerable sector. It’s still hard to determine the full impact of the trade war on the local labour market given how quickly the landscape is changing, he said, pointing to the U.S. decision this week to raise tariffs on steel and aluminum to 50 per cent from 25 per cent as the most recent example.
“Any tariffs imposed on our manufacturing, even steel and aluminum, will have a rather large negative impact,” he said.
“Given that Southwestern Ontario is an automotive manufacturing powerhouse that is heavily interconnected . . . if production is halted, or production is impacted at one plant, it will certainly trickle through the supply chain and affect plants in other cities, including London.”
A recent study by the Financial Accountability Office of Ontario ranked London fifth among regions provincewide likely facing the hardest hit from the trade war, projecting the local economy could lose as many as 11,500 jobs in total.
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However, the fact London’s economy isn’t as heavily reliant on manufacturing as other centres such as Windsor, which lost 3,100 jobs last month alone, means “London is perhaps a bit more insulated” than other areas of the country, Ristovski said.
“There’s still a rather large negative impact from the tariffs set in place by the United States . . . but the city could possibly fare a bit better,” he said.
That was partially reflected in Friday’s data, with the highest unemployment rates seen in Windsor (10.8 per cent), Oshawa (9.1 per cent) and Toronto (8.8 per cent).
After two rough reports in which the province lost about 62,000 jobs, Ontario’s jobless rate was unchanged in May at 7.9 per cent, with total employment virtually unchanged, Statistics Canada reported.
It was a similar story nationally, with Statistics Canada saying employment saw little movement. Yet, the national unemployment rate edged up by the smallest of margins, sitting at seven per cent in May – the highest rate since 2016, excluding the COVID-19 years.
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TD senior economist Leslie Preston said in a note to clients the Canadian labour market was “basically treading water.”
“May’s jobs report puts another mark in the economic weakness tally,” Preston said. “We think this will ultimately lead to further rate cuts from the Bank of Canada.”
The Bank of Canada held its benchmark interest rate steady at 2.75 per cent for the second time in a row on Wednesday. Its next decision is set for July 30.
BMO chief economist Doug Porter gave the May jobs report a “passing grade,” citing strength in private sector and full-time work.
“But the persistent rise in the jobless rate is a loud warning bell,” he said.
“The main point is that slack is still growing in the labour market, suggesting that the Bank of Canada may not be done cutting rates just yet.”
With Canadian Press files
London-area monthly jobless rate:May 2024: 6.3%June 2024: 6.2%July 2024: 6.5%August 2024: 6.5%September 2024: 6.4%October 2024: 6.4%November 2024: 6.5%December 2024: 7.1%January 2025: 7%February 2025: 6.6%March 2025: 5.9%April 2025: 6.4%May 2025: 6.9%
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