Canada’s unemployment rate hit 5.4% in August, its first increase in seven months, as the economy began to slow. Statistics Canada said Friday in its latest workforce survey that it lost about 40,000 jobs last month. Losses were concentrated in the public sector.
The unemployment rate was 4.9% in July, the lowest level since comparable data was collected in 1976.
Employment decreased in British Columbia, Manitoba, and Nova Scotia, but increased in Quebec. In addition to the 27,000 jobs created in the province – all part-time – more Quebecers were looking for work, and the unemployment rate was measured at 4.5%, up from 0.4 percentage points. Other counties reported a slight discrepancy.
August was the third consecutive month of job losses in Canada. According to Bank of Montreal economist Sal Gutierre, the economy is starting to show some weakness, after being remarkably strong in the first half. “It was working very well until a few months ago, and now it looks like it’s hit potholes,” he said.
According to Statistics Canada, employment gains in professional, scientific and technical services have been offset by declines in education and construction. For its part, CIBC noted that the loss of 50,000 jobs in the education sector probably reflects seasonal and reversible difficulties.
Bank of Canada attentive
The Bank of Canada is monitoring all developments in the economy as it campaigns to raise interest rates in an effort to stem high inflation. An economic slowdown is expected as interest rates continue to rise.
While another labor force survey will be released before the October meeting [de la banque centrale canadienne]”It is still likely that there will be at least one rate hike before a pause,” CIBC economist Andrew Grantham said in an email.
Average hourly wages rose 5.4% in August compared to the same month last year, which showed an acceleration from the 5.2% annual increase in July.
This rate of wage growth “would be a little surprising” in the context of rising inflation, says Bank of Montreal’s Sal Gutierre. He predicted “the Bank of Canada will worry about inflation expectations, at least enough that we have another rate hike at the end of October, perhaps by about 50 basis points.”