Canada is facing a daunting challenge in trying to put a positive spin on the latest employment figures released by Statistics Canada. Despite adding jobs in August, the country also saw a significant increase in the number of workers, leading to a rise in the unemployment rate, especially in its largest cities, where the rates are reminiscent of a deep recession.
- Canadian employment statistics may seem promising at first glance, with the employed population reaching 20.54 million in August, indicating a 0.3% increase (20k jobs). However, a closer look reveals a more concerning trend. While the overall number of jobs increased, there was a decline in the number of full-time positions, with a loss of 44k roles. The addition of 66k part-time jobs barely balanced out the equation, raising concerns about household financial stability amidst a backdrop of rising unemployment.
- In a worrisome sign of unsustainable growth, Canada’s labor force expanded by a staggering four times the number of jobs added last month, resulting in 80k additional workers (4.3%) in August. This surplus of 60k workers contributed to the surge in the unemployed population, which reached 1.5 million, marking a significant increase of 272k people (22.9%) from the previous year.
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The spike in unemployment also translated into a notable uptick in Canada’s overall unemployment rate, which climbed by 0.2 points to 6.6% in August, reaching its highest level since May 2017 (excluding the pandemic), erasing nearly seven years’ worth of progress.
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The impact of this trend has been most acutely felt in Canada’s major cities, where elevated levels of unemployment have become a cause for concern. Among the 20 largest census metropolitan areas (CMAs), many have witnessed a sharp rise in unemployment rates over the past year, with cities like Windsor (9.2%), Edmonton (8.6%), and Toronto (8.0%) among the hardest hit. This surge in unemployment poses challenges not just for the economy but also for social stability and population growth in these urban centers.
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On a more positive note, only two markets, Victoria (3.3%) and Quebec (4.0%), have maintained unemployment rates close to “full employment,” the threshold below which inflationary pressures typically emerge.
As Canada grapples with the impact of elevated unemployment rates in its largest cities, there is a growing concern about the ability of these regions to sustain their real estate markets and accommodate population growth. With stricter eligibility criteria for temporary foreign worker programs and upcoming restrictions on student visas, the real estate industry may face additional challenges in the near future. It is imperative for policymakers to address these issues proactively to prevent further economic strain and social upheaval.
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