Canada’s reduced unemployment rate remains consistent with 4.9 % aligning with the previous month’s reduced rate. The number of unemployed individuals remains the same at 1 million in July. Additionally, over 426,000 individuals wished to be employed but didn’t seek any, and therefore, they can’t be categorized as unemployed people. This situation differs for the sixth consecutive month. This modified unemployment is indicative of the capable labor supply at 6.8 %. This percentage is considered the lowest compared to the data available for comparison since 1997.
According to Statistics Canada, the Canadian employment rate reduced to 31,000 job offers, not representing a drastic or massive change. Canada witnessed a considerable loss of over 74,000 jobs between May and July. The employment rate significantly increased by over one million from May 2021 to 2022.
July is yet another month when Canada is observed to have a reduced unemployment rate. Canada is currently undergoing a challenging phase within its labor market, with one million job vacancies available.
For the last two months, Canada has experienced a continuous low employment rate which is certainly indicative of its tight labor market conditions. According to RBC’s Economist, there is continued increased demand for the labor force because the job vacancies and postings are up to 65 % above the Covid-phase level. Also, the available Canadians who are unemployed are really deficient in number and aren’t sufficient to fill in the labor market gap.
For the Public sector employees, the employment rate declined by 51,000 in July, that is, by 1.2 %. This reduction was the first one in the public sector in twelve months. The decline was more prominent in the provinces of Ontario and Quebec. Public sector employment increased to 5.3 %, even though a monthly decrease was observed compared to last year in July.
The percentage of self-employed individuals in June was –2.2 % (59,000). However, the percentage increased to 1.3 % (34,000 people) in July. Despite the percentage increase, the yearly percentage of self-employment was not considered high. The annual percentage was reduced by –7.4 % compared to the pre-Covid phase.
In July, the Service-producing sector even experienced a huge decline of 0.3 % (53,000 people). The Service-producing sector experienced this reduction due to a significant loss in Retail and Wholesale trade. In July, the percentage of people employed in retail and wholesale trade came down to 9 % (with 27,000 individuals). Most of the reductions have been dominant in Ontario and Quebec.
An uneven percentage of job loss was reported in the Services sector such as Wholesale and Retail, Education and Health. Few sectors even reported higher vacancies; however, labor supply is considered the main underlying problem compared to the demand for the workforce.
Comparing the two reports of this month and the previous one, there has been an unpredictable decrease in wage growth.
As per reports, employees’ hourly wages increased to 5.2 % in July. The scenario was similar to June’s, with roughly the same increase. Yet another month, we saw a growth in average hourly wages, with 5.0 % and $1.05 for part-time, 4.9 % and $1.52 for full-time employees. The initial part of 2022 experienced a faster wage growth among full-time and part-time employees.
Inflation Data reported an increase of 8.1 % yearly in June. This was by far the most significant change observed in 40 years.
An Economist even stated that the annual pay raise is comparatively inadequate with the current inflation rate. Due to the increased unemployment rate and higher vacancies available, workers can negotiate their wages better.
BMO’s Economist also stated that the main problem is the tightened job market. He further added that unemployment is at its lowest in the last fifty years with solid wages. However, from a realistic perspective, it is evident that employers cannot search for appropriate employees, thereby pausing the country’s economic growth.
