Canada’s jobless rate rises to highest since Omicron variant
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Canada’s unemployment rate rose to the highest level since the economy emerged from the pandemic, in another sign the labour market has cooled off.
The nation’s jobless rate rose to 6.2 per cent in May, from 6.1 per cent a month earlier., according to Statistics Canada’s latest labour force survey. That’s the highest since January 2022, when the country was dealing with the spread of the Omicron variant of COVID-19.
The unemployment rate last month increased despite the economy adding 27,000 net new jobs. But the gain in employment didn’t keep up with increases in population, generating a higher unemployment rate.
A rising jobless rate coupled with rising employment has been a historically peculiar feature of the nation’s economy over the past year. Canada continues to generate half decent gains in employment, but not enough to keep up with the massive increases in international migration.
Employment has increased by 192,000 in the first five months of 2024, which is an exceptionally strong start to a year. But the labour force is up 314,000.
The imbalance is creating an excess supply of workers that policy makers are interpreting as weakness in the economy. This “extra capacity” is one of the reasons the Bank of Canada this week cut interest rates for the first time in four years.
Still, despite a continued demand for workers, the data suggests Canada continues to lag the U.S. The U.S. Bureau of Labor Statistics reported separately on Friday that non-farm payrolls advanced by 272,000 last month, smashing expectations.
