Canadian economy sees modest employment gain in September, jobless rate falls to 5.2%

The Canadian economy posted a modest gain in employment in September, reversing some of the losses seen in previous months and suggesting the labour market remains exceptionally tight.

The unemployment rate for the month fell to 5.2% as fewer people looked for work, down from 5.4% the previous August, Statistics Canada reported in its labour force survey released on Friday.

Meanwhile, 21,000 jobs were added to the economy.

The gain in employment was expected as job losses in the education sector during the summer were reversed with the reopening of schools.

The report said gains in education, health care and social assistance were offset by losses in several other sectors, including manufacturing and information, culture and recreation.

Canada’s labour force participation rate — the percentage of people who want and are looking for a job — edged down slightly by 0.1% in September.

The rise in employment comes after three consecutive months of job losses in the Canadian economy.

The latest jobs numbers reinforce that the labour market is still very tight, said TD director of economics James Orlando.

“We still have lots of job vacancies out there, we still have a supply-demand imbalance for labour in Canada,” Orlando said.

As the Bank of Canada raises interest rates aggressively to tame high inflation, the Canadian economy is expected to feel the effects of higher interest rates both in its economic growth and employment numbers.

The central bank has suggested tight labour markets are partly to blame for high inflation.

“We’re a long way from that being fixed,” Orlando said.

As more sectors of the economy begin to feel the cooling effects of higher interest rates, TD is forecasting unemployment will rise to 5.6% this year and will later peak at 6.5%.

Friday’s report also showed that wages are continuing to grow, though at a slower pace than the cost of living. In September, wages were up by 5.2% compared with a year ago, with the average hourly wage at $31.67.

It marked the fourth straight month of five% or higher wage growth.

In August, the annual inflation rate was seven%.

The report also looked at retirement among Canadians under the age of 65, one key factor in the apparent shortage of workers. Nearly one million Canadians between the ages of 55 and 64 said they were retired in September.

Over the last 20 years, the labour force participation rate has fallen steadily, largely due to an aging population.

The federal agency said since September 2019, the number of Canadians aged 65 and older grew by 11.6%, while the working-age population grew by 3.5%.

As children headed back to school in September, the report also examined the effect of childcare responsibilities on career decisions. Despite a record-high employment rate, women between the ages of 25 and 54 with children under the age of 16 were twice as likely to decide not to apply for a job or promotion over the last year than their male counterparts.

Women were also twice as likely as men to report helping their children with homework and home-schooling most or all of the time.