Canada’s unemployment rate rose to six.1% in March as more people searched for work and job growth stalled – confirming expectations of a rate cut in June.
The unemployment rate in Canada in February 2024
Statistics Canada Labor Force Survey on Friday, April 5, shows the unemployment rate rose from 5.8% in February, marking the most important monthly increase within the unemployment rate since summer 2022. Employment was little modified last month, with the economy shedding 2,200 jobs, following several months of modest increases all year long.
“The cracks that had appeared in the Canadian labor market suddenly became much larger,” wrote Andrew Grantham, executive director of economics at CIBC, in a note to clients.
The March jobs report is the last major economic data set Bank of Canada (BoC) should give it some thought before the subsequent one Interest rate decision On Wednesday.
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What Canadian investors and economists are on the lookout for
Canadian investors will wait for guidance from the central bank on when it plans to start out cutting its key rate of interest, currently at 5%. Economists had been betting that the BoC would make its first rate cut in June or July, but expectations at the moment are leaning more towards June.
Nathan Janzen, RBC’s deputy chief economist, says the roles data throws a wrench into strong economic growth numbers from early 2024. “For (the BoC) this will be another reason to take the very strong GDP numbers we had in early 2024, with a larger grain of salt,” he said.
Statistics Canada reported this Real gross domestic product (GDP) increased by 0.6% in January. The agency added that it expects growth to proceed in February, with a preliminary estimate suggesting a 0.4% gain.
Janzen said other indicators, akin to rising corporate bankruptcies and declining job openings, suggest the economy is feeling the impact of upper rates of interest.
Will Canada’s economy follow the US economy?
Canada’s latest jobs data stands in stark contrast to employment numbers south of the border, also released Friday, because the U.S. economy continues to be a worldwide outlier. U.S. employers added a whopping 303,000 staff in March, boosting hopes that the economy can overcome inflation without falling into recession amid high rates of interest.
Meanwhile, the rise in unemployment in Canada comes as high borrowing costs weigh on businesses and powerful population growth continues to extend the country’s labor supply. The unemployment rate rose by one percentage point in comparison with the previous yr.
“The problem is that at a time when the population is still growing, we are seeing a slight decline in employment, and very, very quickly. And that was the main concern in that report,” Grantham later said in an interview.
Canada’s unemployment rate and unemployment statistics
According to Statistics Canada, the rise within the unemployment rate was as a consequence of a rise of 60,000 individuals who were on the lookout for work or were temporarily laid off. The total variety of unemployed people within the country reached 1.3 million last month, a rise of nearly 250,000 in comparison with a yr ago.
Young people specifically are feeling the cold on the job market. Employment amongst 15- to 24-year-olds fell by 28,000 in March and the unemployment rate for the group rose to 12.6%, the best level since September 2016 outside of the pandemic years of 2020 and 2021, based on a report published in January RBC report Students and recent graduatesas an alternative of Newcomers to Canada, are driving the rise in unemployment within the country. (Here are Best Jobs in Canada for Immigrants.)
“Almost half of the annual increase in the total number of unemployed in Canada … were students who were not in the labor market and started looking for work,” Janzen said.
Friday’s report shows that job losses last month were concentrated in accommodation and food services, followed by wholesale and retail, and business and industrial scientific and technical services. Meanwhile, employment rose in 4 industries, led by Healthcare and social assistance.
Despite weaker labor market conditions Wage growth continued to grow rapidly, with average hourly wages increasing by 5.1% annually.
Although economists are preparing for rate of interest cuts in the approaching months, the labor market is predicted to stay weak for some time.
Janzen expects the unemployment rate to peak at 6.5% within the third quarter of the yr and notes that rates of interest will proceed to slow growth until they return to normal levels.
It’s not a lot that when the Bank of Canada starts cutting rates of interest, it is going to step on the gas and help the economy pick up,” he said. “It’s just starting to loosen the brakes.”
Read more about unemployment:
- These firms laid off Canadian staff in 2024
- How to qualify for EI advantages in retirement in Canada
- How to arrange for a possible job loss in Canada
- Unemployed? Should you make RRSP withdrawals to repay debt?
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