The unemployment rate rose for the first time in nine months in Canada, which could be a first step towards an increasingly likely recession.
The labor market lost 17,400 jobs in May and the unemployment rate rose 0.2% to 5.2%, Statistics Canada reported Friday. Ontario suffered, with a loss of 24,000 jobs and an unemployment rate that jumped from 4.9% to 5.5%.
Quebec gained 1,600 jobs in May and its unemployment rate fell slightly, from 4.1% to 4.0%, close to its historic low of 3.9%. In the Montreal region, the unemployment rate fell from 4.3% to 3.9%, the lowest rate since this regional data is compiled, that is to say since 2006.
The Canadian economy has been adding jobs at a good pace since the start of the year and the unemployment rate has remained at 5% for five months. The first rise in the unemployment rate for nine months, in May, is the turnaround that economists at the National Bank have been waiting for a long time.
“It was only a matter of time before a turnaround occurred after a wave of hiring,” said Matthieu Arseneau, deputy chief economist.
“The details of the report are equally grim,” he notes. Full-time employment contracted for the second month in a row,” something that hadn’t happened in two years.
Monthly data can be volatile, Arseneau acknowledges, but the fact that corporate profits are falling and most SMEs say they can no longer raise wages suggests the labor market will continue to deteriorate.
A first increase in the unemployment rate in nine months, “it’s sure that it wakes up a bit,” said Hélène Bégin, economist at Desjardins. “But with data from just one month, it’s premature to conclude that the labor market has just changed course,” she said.
“It was especially played out in Ontario, where the unemployment rate went from 4.9% to 5.5%, she explains, but where the economy is doing relatively well with the recovery of the sector. car. Employment could therefore rebound in Ontario, according to her, but not in Quebec, where the economy has lost its momentum since the start of the year.
May’s numbers could be the first crack in the job market, but Laurentian Bank economist Sebastien Lavoie believes that’s not the case. “We can’t speak of a generalized weakness in employment,” he says, pointing to the fact that employment has mainly fallen for young people aged 15 to 24, but is still increasing among those aged 25 to 54. .
The Laurentian Bank economist, who had been one of the few to predict the key rate hike announced Wednesday by the Bank of Canada, believes that the labor market remains tight and that another rate hike will be announced in July.
The average hourly wage continues to increase at an annual rate of more than 5% in the country, which is not good news for the Bank of Canada whose objective is to bring inflation back to the target of 2%.
In Quebec, the average hourly wage is growing even faster, notes Hélène Bégin, economist at Desjardins. At 5.4%, the increase in the average hourly wage in Quebec is higher than the inflation rate of 4.8% in the province. The minimum wage was increased by $1.00 per hour on May 1 in Quebec, to $15.25.
On closer inspection, however, we see that the wage trend is down. “The increase in hourly wages was only 2% in Canada on an annualized basis of three months,” said Marc Desormeaux, also an economist at Desjardins.
“This measure has been hovering around 2% to 3% over the past three months, suggesting the year-over-year change is likely to slow further in the second quarter,” he said.
Quebec has 1,600 more jobs in May, mostly full-time jobs (9,100) which more than offset the loss of part-time jobs (-7,600).
Job gains were in transportation and warehousing (10,000), public administration (10,000) and manufacturing (4,300). Job losses occurred in business services (-8,700), information, culture and recreation (-7,700) and accommodation and food services (-3,900).
There were 94,000 more jobs in Quebec in May than at the same time last year, underlines the Institut du Québec.
In Quebec, the unemployment rate, which had fallen to 1.7% in April, rose to 2.6% in May (three-month moving average). Despite this jump of 0.9 percentage points, the Quebec City region still holds the record for the lowest regional unemployment rate in Canada.
