Canada’s economy lost 40,000 jobs in August, enough to push up the jobless rate by half a percentage point, to 5.4 per cent, Statistics Canada reported Friday.
Economists had been expecting the economy to add between 10,000 and 15,000 jobs during the month, which would have been a reversal after two straight monthly declines in June and July.
Instead, August’s numbers bring the three-month tally of losses to more than 100,000 since May.
The job losses were enough to push up the jobless rate for the first time in seven months. In June, Canada’s unemployment rate fell to 4.9 per cent, its lowest level on record. It stayed flat in July, but has now jumped up by half a percentage point from that record low level.
Most of the job losses came from two sectors: 28,000 in construction, and almost 50,000 gone in education.
Education jobs typically decline during the summer normally, which is one of the reasons why Scotiabank economist Derek Holt isn’t inclined to worry too much about that drop.
“Where did all the teachers go? Possibly nowhere — other than back to school — as it may just be a data distortion that likely has something to do with messy contract negotiations and the staggered expiration of teacher contracts across the country,” he said.
As for construction, economist Tu Nguyen with consultancy firm RSM Canada says the slowdown was to be expected due to how the Bank of Canada’s aggressive series of rate hikes have poured cold water on the housing market.
Many new development projects have been cancelled due to tepid buyer demand, which led to less demand for construction workers to build them.
“Most other industries either held steady or added jobs, which means overall, demand for labour is still there,” Nguyen said.
“If we enter a recession, it will be industry-specific, and certain areas will get hurt substantially more than others.”
Growing recession fears
She wasn’t the only person to utter the R-word upon seeing the numbers, however. Three monthly declines in jobs are typically only seen when economies are in recession, Royce Mendes from Desjardins noted.
“While revisions can always change the picture down the road, the deterioration in the job market appears to be occurring faster than anticipated,” he said.
Average hourly wages during the month were $31.33. That’s up by 5.4 per cent compared to what they were a year ago. For comparison purposes, Canada’s inflation rate is currently 7.6 per cent, which means wage gains are still far from keeping up with inflation.
Leave a comment