Reference to the CFA’s Advocacy Update from September 15, 2022

Canadian employment levels unexpectedly fell for a third straight month in August and the jobless rate jumped, a potential signal interest-rate hikes have started to cool the tight labour market.

The economy shed 39,700 jobs last month, Statistics Canada reported on Friday in Ottawa, a surprise negative reading compared to the 15,000 gain anticipated by economists in a Bloomberg survey.

The jobless rate rose to 5.4 per cent from record lows of 4.9 per cent in June and July due to the biggest increase in the number of unemployed since strict COVID measures were imposed in January.

The decrease in employment and higher jobless rate may be evidence the country’s labour force is re-balancing as the Bank of Canada’s aggressive rate hikes start to cool economic growth and slow demand. The additional job searchers may likewise ease wage growth as the labour supply expands.

August’s employment drop brought cumulative declines since May to 114,000, suggesting that hiring activities may be moderating. The data, however, continue to show signs of extreme tightness in the labour market, even with three months of job losses.

The average hourly wage rate was up 5.4 per cent from a year ago, compared with 5.2 per cent in both June and July. That’s the fastest increase in records dating to 1997, outside of the pandemic.

Hours worked were unchanged in August, following a decline of 0.5 per cent in July. Labour force participation rates rose 0.1 percentage points to 64.8 per cent, while the number of Canadians in the labour force grew by 66,000 in August.

Employment declines were driven by educational services and the construction sectors. The public sector shed 27,600 positions, the bulk of August’s job losses.

Regionally, employment fell most in British Columbia, Manitoba and Nova Scotia, while it increased in Quebec. Other provinces, including Ontario, saw little change.

Click here for the Statistics Canada Labour Force Survey, August 2022.