Despite the difficult commercial context, companies do not make massive layoffs, but they do not hire either. Young people are those who suffer the most, they whose unemployment rate has reached almost 15 % in July, the highest level since 2010.
The Canadian economy lost 41,000 jobs in July, including 34,000 in the 15 to 24 year old category. The unemployment rate in the country has remained unchanged, at 6.9 %, despite the drop in hours worked and the extension of the duration of unemployment which indicate a deterioration in the job market.
Quebec lost 15,000 jobs in July, after adding 23,000 in June. The unemployment rate fell 0.8 %to 5.5 %, due to a sharp drop in the number of people looking for a job.
There are no waves of layoffs, but employers remain on their guard, commented the economist of Desjardins, Sonny Scarfone. “Marked by the shortages of labor in recent years, they hesitate to reduce their workforce. This climate of prudence especially slows down the entry of young people into the labor market, “he said.
In a study published last week, Sonny Scarfone pointed out that the job market is particularly difficult for young people 20 to 24 years in search of a first job. And this is not only the case in Canada, he observed.
“In the United States, the unemployment rate of university graduates aged 22 to 27, a still young cohort, but already endowed with some experience, now exceeds that of all workers.”
Recent technological developments, such as artificial intelligence applications, could have a role to play in tightening the job market for young graduates, advances the economist, but it would be premature to make it the main explanation.
The drop in vacant posts, inflation and commercial tensions slow hires and remain, according to him, the main cause of high unemployment among young people.
A market that deteriorates
After the unexpected creation of 83,000 jobs in June, the job market continues to thwart the predictions of economists. An increase of some 10,000 to 15,000 jobs was expected, rather than a loss of 41,000.
The job losses in July are concentrated in the information and culture, construction and business services sector.
Statistics Canada stresses that despite the tariff war and the uncertainty that results from it, the layoff rate remains unchanged from what it was a month earlier. Surprisingly, employment has increased in transport and storage, a sector targeted by customs duties. The increase in July in this sector is the first since January, specifies Statistics Canada.
In Quebec, the increase of 23,000 jobs in June was followed by a loss of 15,000 jobs in July, but losses are concentrated in the manufacturing sector which is at the heart of the trade war.
At 5.5 %, the unemployment rate in the province remains one of the lowest in the country. It increased by 0.1 % in Ontario, to 7.9 %.
Toronto displays the highest unemployment rate among the main Canadian cities, 9.2 %, compared to 6.3 % in Montreal and 6.1 % in Vancouver.
Beyond the monthly data, the portrait of the Canadian Employment Market remains gloomy, according to economists from the National Bank. “If you are looking for reasons to be optimistic about the future of employment, you will not find much of it,” said Taylor Schleich and Ethan Currie.
Since the beginning of the year, employment growth has not been so slow since 2016, they have stressed. “More and more Canadian people are to fight for fewer and fewer jobs,” they said.
The Bank of Canada will take note of the growing gloom on the job market, but by its next decision on the rates, on September 17, other data could influence it, including two reports on inflation.
The central bank has just decided to leave its key rate unchanged to 2.75 % for the third consecutive time. The overall inflation rate is currently 1.9 %, but basic inflation measures are higher than the target of 2 %.
The degradation of the labor market could encourage the Bank of Canada to reduce interest rates in September, a possibility that divides economists.
“It will still have to be inflation significantly in the next two months for a drop in September to be very likely,” believes Doug Porter, the chief economist of BMO.