Unemployment falls to record low, even as economy loses jobs

The Canadian economy lost 43,000 jobs in June, marking the first decline in employment since January.

At the same time, the unemployment rate fell to another record low of 4.9%, according to Statistics Canada’s latest labour force survey Friday.

The unemployment rate in May was 5.1%, the lowest rate since at least 1976 which is as far back as comparable data goes.

The agency attributed the decline in the unemployment rate to fewer people looking for work, while the loss in jobs was driven by a decline in self-employment by 59,000 jobs.

Employment in the public and private sectors held steady.

As was expected by economists, wages grew at a faster pace, with average hourly wages rising 5.2% to $31.24 year over year.

In comparison to wage growth prior to the pandemic, June recorded the fastest growth since the collection of comparable data in 1998. However, the rise in wages in June was still below the most recent inflation rate of 7.7% reported in May.

Wage growth was led by gains among non-unionized workers, who saw their wages go up by 6.1%, while unionized workers experienced a slower rise in wages of 3.7%.

Employment in the services-producing sector declined by 76,000, erasing gains made earlier in the years. The largest decline in employment was in retail trade. The report said data over the next few months may help answer whether the decline was due to consumer behaviours changing as inflation remains high.

Employment in the goods-producing sector rebounded, with 33,000 jobs added.

With a rise in hours worked of 1.3% and the decline in jobs offset by lower labour participation, CIBC chief economist Avery Shenfeld said the Bank of Canada wouldn’t be dissuaded from raising interest rates more aggressively.

“On its own, the headline jobs decline isn’t yet convincing evidence of a slowdown that will deter the Bank of Canada from a 75 [basis point] hike next week,” Shenfeld said in an email.

The Bank of Canada is set to announce its key policy rate decision on July 13.

The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.