Rather than increasing by 15,000, the number of jobs in Canada as of the end of July fell by around 30,600 positions. While it has raised eyebrows throughout the country, economists at the National Bank quickly assured the public that there are no worrying issues currently affecting the Canadian job market. Indeed, according to recent data from Statistics Canada, the country’s unemployment rate stands at a historic low of 4.9%.
Likewise, private companies have added around 110,000 positions to the market. In this case, the economy is expected to see further resilience in the near future.
Nevertheless, the majority of economists feel that this will not deter the Bank of Canada from another increase in interest rates to further stem inflation. Also, job statistics for July hint that this North American economy is beginning to lose its momentum regarding growth.
According to Rishi Sondhi, an economist for TD Economics, this is the second consecutive month wherein the number of jobs has fallen significantly. Indeed, Sondhi noted that employment has declined by an average of 11,000 over the past three months, which is consistent with the view that the country’s economic growth will slow down in the second half of 2022.
Meanwhile, Capital Economics’ Stephen Brown opines that the current issue is unlikely to keep the Bank of Canada from hiking its policy rate by an additional 100 base points, seeing how the unemployment rate remains low, and wages have been increasing steadily.
However, he also pointed out that average hourly earnings were slightly lower than forecast. Yet, the 0.4% month-over-month growth is still too high to meet the Bank’s 2% CPI inflation target.
CIBC Economics’ Andrew Grantham noted that most of the jobs lost in the past month belonged to the services sector, including wholesale and retail sales, education, and healthcare. With these sectors reporting higher vacancy rates, the key issues appear to be supply and demand: too many jobs to be filled but not enough potential employees qualified enough to take them.
On the other hand, economist Douglas Porter of BMO Economics feels that the national job market is losing momentum at an alarmingly rapid rate. He attributes this to a notable cooling of the economy overall and a lack of available or qualified workers.
He pointed out that experts and analysts need to closely watch the downward drift in participation, particularly among those between the ages of fifteen and 64. Porter believes any changes here could possibly tighten the job market even more in the coming months.