Updated August 9, 2024 @ 1:06pm
Students who have been hunting for a summer job and recent immigrants looking for work have felt the brunt of the country's weakening labour market, Statistics Canada's latest employment report shows.
The federal agency’s July labour force survey released on Friday says the overall jobless rate held steady at 6.4 per cent last month as the economy shed a modest 2,800 jobs.
The employment rate, which measures the share of the population aged 15 and older that is employed, fell slightly as fewer people looked for work.
"For the second straight month, Canadian employment was essentially unchanged, disappointing expectations for a modest 25,000 gain," wrote TD senior economist Leslie Preston in a client note.
Amidst historically high interest rates, the unemployment rate has climbed 0.9 percentage points over the last year and job vacancies have plummeted.
The latest data suggests young people and recent immigrants, however, have been among the most affected by deteriorating economic conditions.
Among students between the ages of 15 and 24 returning to school in the fall, 51.3 per cent of them were employed last month, down a staggering 6.8 percentage points from a year ago.
Statistics Canada says that’s the lowest employment rate for returning students since July 1997, outside of July 2020 during the COVID-19 pandemic.
The slowdown in the Canadian job market has also been particularly felt by recent immigrants, as their unemployment rate has climbed 3.1 percentage points on an annual basis to 12.6 per cent in July.
By comparison, the unemployment rate for people born in Canada rose 0.5 percentage points over the last year to 5.6 per cent in the month.
Brendon Bernard, a senior economist at hiring website Indeed, said young people and newcomers have been disproportionately affected by the economic slowdown because employers are hiring fewer workers, rather than laying employees off.
"Youth and recent newcomers to Canada are a bit more cyclically sensitive to the ups and downs of the job market. But what's also going on is both groups (are) experiencing rapid population growth," Bernard said.
The increase in unemployment is especially stark for recent immigrant youth, who face a jobless rate of 22.8 per cent. That’s up 8.6 percentage points from a year ago.
The softening job market however doesn't appear to be affecting wage growth yet as average hourly wages continued to grow at a strong pace, rising 5.2 per cent from a year ago.
"It's good news for those in stable employment, they're seeing their paychecks rise at a pretty solid pace," Bernard said.
"But for those out of work, that's sort of cold comfort."
The Bank of Canada has signalled that it’s increasingly concerned about job market conditions.
Governor Tiff Macklem said last month that the central bank’s decision to cut its key interest rate again was driven in part by a desire to boost economic growth.
The Bank of Canada’s summary of deliberations released earlier this week suggested some members of the governing council are worried further deterioration in the labour market could hinder that process.
"The minutes from last month's Bank of Canada policy decision highlighted growing concern regarding the state of the labour market, and today's data will do little to ease those concerns even with the jobless rate holding steady," wrote Andrew Grantham, a senior economist at CIBC.
Grantham says CIBC expects three more interest rate cuts this year, one at every scheduled decision. The bank's next interest rate decision is set for Sept. 4.
The Bank of Canada's key interest rate now stands at 4.5 per cent, a level that's still expected to restrain economic growth.
But the central bank has signalled it plans to continue cutting rates, so long as inflation continues to slow.
This report by The Canadian Press was first published Aug. 9, 2024.
