rennie landscape - kelowna spring 2024.indd

economy

01. economy Canada's unemployment rate has been rising modestly even as the economy has been adding jobs. The reason for this juxtaposition? Look no further than the country's expanding population.

AN UNDERWHELMING LABOUR MARKET

There are myriad ways to examine the labour market in Canada. While the unemployment rate is the most often cited metric, total employment and its month-to-month changes (the number of jobs being added or subtracted each month) gets its fair share of the attention as well. And increasingly of late, the employment measure has been portraying a relatively robust labour market, much more so than it actually is. In 2023, 11 out of the 12 months saw net jobs being added in Canada, with 417,500 new jobs added overall. That’s a larger gain in net employment than in four out of the past five years (with the recovery year of 2021 being the lone exception). And yet, the unemployment rate has consistently risen over the last year, from 5.0% in December 2022 to 5.8% in December 2023, where it also sits as of February 2024. The reason that rising employment has been accompanied by rising unemployment is due

to the record-setting population growth across the country. And while we unfortunately won’t have the full-year population estimates from Statistics Canada in time for this edition of the rennie landscape, we do have the growth in population for those aged 15+ as estimated by the Labour Force Survey. Per that survey, Canada added 945,500 working age Canadians in 2023, an all-time record and 90% more than in 2022. Meanwhile, in 2023 there were only 0.9% more jobs added than in 2022. The unprecedented population growth Canada has been experiencing has had a number of economic benefits, including adding more people to the workforce. But it has also masked, to a degree, a labour market and economy suffering under the weight of high interest rates. And when we look at metrics on a per-capita basis (which will be a theme throughout this edition of the rennie landscape), we see a relatively weak labour market which is bad news for workers, but likely good news for inflation.

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