economy
01. economy Canada has experienced slow and sustained labour market deterioration for the better part of the last two years, resulting in a situation today that is weak by most metrics.
TRENDING IN THE WRONG DIRECTION
The national unemployment rate has been on an upward trajectory of late, rising from a low of 4.8% in July 2022 to 6.6% most recently (in August). This trend of rising unemployment has occurred alongside some pretty substantial job gains—specifically, 211,000 job additions year-to-date after 418,000 were added in 2023—as Canada’s population has swelled at a record-setting pace. So while annual job growth is at one of its highest levels ever, it belies an otherwise challenged labour market. Looking at a range of labour market indicators compared to both the past decade and a benchmark of the stable pre-pandemic period of 2018-2019, we can see most of the results skewing to the left of their respective benchmark ranges (with the left-hand side of the chart representing worse economic outcomes). Beyond the unemployment rate, unemployment—the number of people not working but still looking for a job— has been growing at almost the same rate
as employment and much faster than during the benchmark period. Even more concerning, however, are the employment and participation rates, both of which have recently hit their lowest level since the turn of the millennium (excluding the pandemic years of 2020 and 2021). That so many working-age Canadians are not engaging with the labour force is partly due to demographics—aging baby boomers are retiring in increasing numbers—but also due to a growing number of discouraged workers leaving the labour force on account of not being able to find suitable employment. On the positive side of the economic ledger, job vacancies are falling and are back to pre-pandemic levels (with more on that later), and the number of EI claimants, while rising, is also at pre-pandemic levels. All-in-all, Canadian labour market gauges point to a steady economic decline and, as such, are cause for some concern. They also point to a need for further interest rate cuts sooner rather than later.
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