Canada’s ability to attract talent is making it a victim of its own success. Statistics Canada (Stat Can) data revealed minimal job losses for July 2023. However, the unemployment rate climbed as population growth doubled the rate of jobs. This helped drive the unemployment to the highest level since the start of 2020.
Canada’s Unemployment Rate Is Back To Pre-Pandemic High
Canada’s unemployment rate did something not seen in the 2020s—it climbed for 3 months in a row. The unemployment rate increased 0.1 points to 5.5% in July. It follows an 0.2 point increase seen in May and June, respectively. The rate is still relatively low, but also the highest since January 2020. Hundreds of billions in stimulus is no longer producing excess growth when it comes to jobs.
Canada’s Unemployment Rate Hits A Multi-Year High
The seasonally adjusted monthly unemployment rate for Canada.
Source: Statistics Canada.
At a high level, a rising unemployment rate is due to falling jobs, and/or a workforce growing too fast. Fewer jobs are self explanatory, but in rare circumstances an economy adds more workers than jobs. Why’s it rare? Would you move to a more expensive region where you are unlikely to find work? It hasn’t been a trend long enough to change people’s minds, but every trend starts with a few months.
To understand Canada’s rising rate, let’s take a quick dive into both of those factors.
Canada’s Employed Population Made A Slight Decline
Canada just saw the number of employed workers fall. There were 6,000 fewer filled jobs in July, leaving 21 million employed persons in the country. It’s a reduction, but not even enough to be an 0.1 point change. Losing 6,000 jobs in a country with 21 million employed workers is equivalent in size to the layoffs at just one big company. One that happens to still be profitable.
Clearly, not the source of unemployment rate growth.
Canada’s Population Growth Is Double Its Job Growth
Canada’s booming population is where most of the rising unemployment rate formed. The labour force expanded by 0.1% (+13,300 people) to reach 21.33 million people in July. Putting it together, that’s 13,000 more workers trying to fit into 6,000 fewer jobs in July. Canada’s population is growing faster than the country can create jobs.
The trend is one that’s persisted for months. From January to July of this year, the employment rate fell 0.5 points. Population increased 1.4% over that period, while jobs rose just 0.7% at the same time. The size of Canada’s workforce is growing at double the rate of job creation, which is a bad position to be in. Ideally it’s not one the country finds comfortable.
Immigrants Are Less Likely To Be Employed
Recent immigrants (arrived within 5 years) are having a tougher time finding jobs. The demographic’s employment rate fell 2.3 points over the past year to 77.7% in July. The agency’s calculations reveal the average rate from 2017 to 2019 was 70.8%, nearly 7 points lower. It’s still easier for recent immigrants to find a job in the 2020s, it’s just becoming more difficult.
For context, Canadian-born workers have seen little change over the same period. The employment rate came in at 86.6% in July, showing little change from a year before. From 2017 to 2019, the average rate was 84.9%, so they’re also having a better time than pre-2020s. At least from the perspective of the employment rate. However, the rate isn’t eroding like it is for recent immigrants.
Canada’s population surge is both helping and hurting the unemployment rate. Having lofty immigration targets helps to stimulate demand, reflected in GDP growth. After all, people consume, and create more aggregate demand. More people means more consumption, especially for areas like food and shelter.
At the same time, stimulus measures become less effective the longer they’re used. Aggregate GDP is growing, but on a per capita basis it’s now contracting. Each unit of “human capital stock” is generating more excess demand than it’s contributing. This leads to market inefficiencies, like inflation growth. Canada is currently struggling to figure out what to do with its windfall in talent.
Canada’s employment numbers seem a little off when you start seeing massive line ups that run for kms for entry level roles like grocery clerks.
I don’t think that means we need to pull back on immigration per se, but we need to consider doing more than just raising the number of approvals per year.
No, we need to pump the brakes. Housing, employment all suffering. Social assistance on rise. You want to bring in masses of folks with no plan. (Not you, the gov). It’s reckless behaviour.
I think we can leave actual immigrant numbers where they are for now, but DRASTICALLY, DRASTICALLY reduce the number of “temporary” residents: TFWs and international students. TFWs shouldn’t be working food service, cutting hair, working at Crappy Tire. We can get Canadians to do those jobs. International students need to be restricted to BAs and grad students only, allowed no more than 20 hours working per week, and no more than 10 percent of any one institution’s enrollment. Let’s
Is no one in charge of enforcing anything in Canada?
The TFW application says the employer must provide affordable housing that costs less than 30% of their wages, but there’s zero chance they’re providing LEGAL affordable housing in this market.
But if regulations and rules are enforced how will the employers be able to maintain huge profit increases? Extreme income inequality could be negatively impacted. Bringing in workers when there is no work, just makes everyone hungry, and corporations more profitable. It’s not about the people. Who cares if there’s no housing, who cares if there is a diminishing quality of life, who cares if the streets are littered with those unable to keep up. “they should pull up their boot straps and get a better job”. Oops there is a diminishing number of jobs and increasing potential workers, forget the last part.
Boarding houses turning neighbourhoods into ghettos. True story.
bingo, its why some houses are packed and some are completely vacant. canada should increase its vacant house tax to force investors over seas to sell or come back to work in this country.
Canada doesn’t have a beneficial ownership registry or any sort of enforcement mechanisms, how are they going to find 1. If the houses are vacant. 2. Who is the beneficial owner(s) of such vacant housing ?
Immigration at 200,000 or less well chosen newcomers probably more appropriate for a country the size of Canada.
We really need a national debate on this!
Great news for the Bank of Canada. Mission accomplished, drive up interest rates, crush that inflation by pummeling the working class, slow growth, drive up unemployment. Add in the largest influx of immigrants in recent history, and, viola, complacent workforce terrified of losing their jobs, while at the same time watching prices rise while they are unable to keep up. The Chambers of Commerce and Business organizations will be thrilled. Increasing profits (yet again) here we come!
This is Great News, I hope it edges Up another 2-3 % so the Clown of the So Called Bank of the Rothchild’s Canadian branch can get Kudos for his efforts to “Kill” inflation without Really Hurting the Real reasons for the inflation which are Corporate Greed and Government Stupidity.😡😡😡😡😡😡😠😠😠😠😠😠😠
Bank of the Rothschilds? There you go blaming Jews for your personal failures. Nothing like spreading hatred to feel better a out your sorry self.
It’s weird that people blame the Rothschilds for everything.
It’s equally weird that the super rich have convinced people that criticism of them is actually just a criticism of their race/gender/religion/etc.. I don’t know about the Rothschilds, but those that I’ve met in the same realm of wealth don’t have religions like you and I. In their mind, they’re their own maker.
Great blog by Daniel on the July unemployment update. There are several additional points worth making. When there is an uptick in the unemployment rate, the participation rate is often fingered as the culprit. In this case, the opposite was the case. The participation rate actually fell from 65.7% in June to 65.6% in July, while in the US the participation rate remained unchanged. If the participation rate had been stable, the uptick in the unemployment rate would have been worse. Second, for no obvious reason, StatCan only calculates an alternative unemployment rate series, R3, “comparable to the United States rate” that is not adjusted for seasonal variation. However, this series increased from 4.3% in June to 4.8% in July, increasing the gap between this series and the raw US unemployment rate series from 0.7 percentage points to percentage points (i.e., the US raw unemployment rate for July was just 3.5%). This is the biggest gap since May 2021. Third, it is a little ingenuous to pretend, as virtually everyone does, that the strong upsurge in the active population in Canada is coming exclusively from immigration. The Census estimates (h/t Sam Boshra) show that over the last year (2022Q2 to 2023Q1) there were 469 thousand immigrants to Canada, which is a huge number, but this is little more than half the number of net non-permanent residents at 934 thousand. This would include both students from abroad studying in Canada and refugee claimants, including refugees from the war in Ukraine. I am not sure a “windfall in talent”, Daniel’s phrase, is the most apt way to describe this huge inflow. We are not talking about the Jewish physicists who fled Nazi-dominated Europe in the 1940s. Refugees qualify to enter Canada based on their needs, not their talents. Perhaps that is why in labour market discussions they are just glossed over. We pretend that they are part of the regular immigration stream, even though they aren’t. In any case, the July LFS update shows that the active population increased in July by 2.84% on an annualized basis, down slightly from 2.96% in June. So unless real GDP grew by almost 3% per capita last month, the average Canadian got poorer, not richer.
Insane immigration levels never help a country. Especially a country with Cadillac social services like Canada It does help sleazy politicians get re elected though.
What ever stats they give you, just multiply that number by x 5 and that’s the real numbers. They lie about everything
Hey Canada, stop importing so many immigrants and international students to satisfy this obsession with GDP growth, just to feed the upward trajectory chart. Ever heard of donut economics? Aka a sustainable, circular economy? I know, not so phallic, you’ll need to adjust. You can’t do that with x number of imported laborers on welfare, sucking away benefit dollars, with no housing prospects, or living under bridges. Clearly, we’ve satisfied the numbers needed for no-skilled work if you have lineups of people looking for cashier jobs. Been a liberal forever, but this time I’ll be voting for Poilievre.
When more people settle there in less time .there will b temporary shortage of jobs . But after passage of time will reflect in providing good economy. Everyone who is going there to settle needs a home grocery agricutural products etc which will create variety of jobs In future
This country is collapsing in real time due to mass migration. Get out while you can.
Yep, even immigrants who came here one or two decades ago are saying the same thing!! They literally tell me, we must stop, we can’t support any more people with our current infrastructure, roads, healthcare and housing. But if a Canadian-born resident says that, it’s r*cist. I mean, have we heard of freedom of speech? I’ve never had to invoke that before, ever, but now suddenly it’s relevant. Let’s take care of our own first, above all else. Plenty of problems doing that as it is. Nobody is forcing us to take on more people, that’s the government’s own will. Canada was already great, *as is*, with all the folks we already have here. Let’s keep it that way. Stop chasing some ephemeral GDP number, as if it means anything.
I’ve often not seen a commentary where everyone is bang on with FACT, and in such concensus. When that happens here, we have a real problem, and one we all see, regardless of political leaning etc.
Never forget that this 5-7% unemployment # is completely inaccurate. It’s only counting the ppl accepting Ei payments “looking for a job”. Many have given up hope, of finding something worth while in this unaffordable grift-like society. So the more accurate % would probably be 15-24% give up rate