Canada's unemployment rate has risen again

Statistics Canada has published another regular report on the labor market situation. Over the past month, the unemployment rate rose slightly again: from 5.7% in October to 5.8% in November. That said, the economy still beat all experts' expectations, adding 25,000 jobs. But it still hasn't kept up with the rate of population growth.

The main category of the population, due to which unemployment is now growing, is young people from 15 to 24 years old. In addition, the rate of layoffs continues to rise. Compared to last year, the unemployed in November were more likely to quit their previous job, reflecting more challenging economic conditions in general and labor market conditions in particular in 2023.

Canada's unemployment rate is currently hovering near pre-pandemic levels but is expected to continue to rise as higher borrowing rates put pressure on businesses.

"The increase hasn't been that large to date, but it is the kind of increase that typically you only see at the start of a labour market downturn," commented Nathan Janzen, assistant chief economist at the Royal Bank of Canada.

Immigrants in the labor market

In recent years, record numbers of immigrants have come to Canada to find work, to reunite with their families, or as refugees. In 2021, the immigrant share reached an all-time high of 23%. From July 1, 2022 to July 1, 2023, immigrants and non-permanent residents accounted for almost 98% of population growth.

While immigrants are playing an increasing role in Canada's labor market, many immigrants still face barriers to labour market integration, including those with post-secondary education or work experience acquired abroad.

Among recent immigrants (those who arrived in Canada within the previous five years) who had foreign work experience or a post-secondary degree, nearly 6 in 10 (58.2%) had difficulty finding a job in their field of study.

In comparison, less than half (47.6%) of those who arrived 5-10 years earlier experienced similar problems.

The most common difficulties were lack of sufficient work experience in Canada (22.7%), lack of labor market connections (20.3%), and lack of references from Canada (18.5%).

Employment in different spheres

Manufacturing and construction saw the largest job gains, while wholesale and retail trade, as well as finance, insurance, real estate, and rental and leasing saw the most job losses.

Territorially across Canada in November, employment rose in New Brunswick and fell in Prince Edward Island. All other provinces showed little change.

Among urban agglomerations, the highest unemployment rates were found in Windsor (7.6%), St. Catharines–Niagara (7.3%) and Oshawa (7.3%). And the lowest unemployment rates were found in Quebec City (2.7%), Kelowna (3.9%) and Victoria (4.1%).

State of the economy

Despite the weakening labor market, average hourly wages continue to grow rapidly, up 4.8% from last year. Experts attribute this to workers seeking compensation due to the recent rise in inflation.

Inflation itself, according to another report from the same Statistics Canada, continues to slow — already down to 3.1%.