The Canadian economy continues to create jobs, but at an anemic pace. As a result, the unemployment rate increased from 6.1% to 6.2% from April to May.
After an increase of 90,000 in April, 27,000 jobs were added in May, Statistics Canada reports. In Quebec, employment changed little and the unemployment rate remained unchanged at 5.1%. The unemployment rate in the Montreal metropolitan area increased from 5.8% to 6% from April to May.
The unemployment rate in Quebec reached a historic low of 3.9% in November 2022. Since then, employment has been up and down, but the upward trend has continued. “The deterioration of the labor market reacts with a certain lag compared to the general economic context,” underlines Desjardins economist Hélène Bégin. The unemployment rate in Quebec should continue to increase in the coming months to reach 6% at the end of the year, according to her.
According to Statistics Canada, part-time employment increased in May, but full-time employment declined. Over the past year, there have been more part-time jobs (3.8%) than full-time jobs (1.6%). The health care, finance, insurance, accommodation and food services sectors made gains.
The number of people who work part-time but would like a full-time job has been increasing over the past year, the survey found.
The increase in involuntary part-time work indicates that the labor market is more fragile than the unemployment rate indicates, according to economists Matthieu Arseneau and Alexandra Ducharme of the National Bank. “With around 50% of SMEs saying they are worried about their sales, we doubt there will be a significant recovery in hiring in the coming months,” they write in their analysis of the latest employment data. The unemployment rate in Canada will rise to 7% by the end of the year, the National Bank predicts.
The average hourly wage continues to increase at a good pace. It rose 5.1% in May from a year earlier. Wage pressures therefore remain strong, which is food for thought for the Bank of Canada, which began reducing its key rate this week. If wage increases do not moderate and fuel inflation, the reduction in interest rates could be slower, some economists say.
Economist Marc Desormeaux, from Desjardins, believes on the contrary that the increase in the unemployment rate in May increases the probability of a second cut in the Bank of Canada’s key rate in July. “Even if wage pressures remain a risk to monitor, the labor market continues to relax and inflation is easing,” he commented, which should satisfy the central bank and encourage it to continue the drop in rates.
Manitoba has the lowest unemployment rate in the country, at 4.9%. A sign that the job market has cooled considerably, the unemployment rate is increasing across all age groups in Canada. Young people aged 15 to 24 are the most affected, with an unemployment rate of more than 12% in Canada and 9.1% in Quebec.