Canada’s economy shed 31,000 jobs in July while the unemployment rate remained at a historic low of 4.9%, confirming what the strong gross domestic product numbers have been showing: The economy is not in recession.
The low unemployment rate, released by Statistics Canada on Friday, furthers the likelihood that the Bank of Canada will announce another sharp rate hike in September, following its one-percentage-point increase last month.
Wages grew by 5.2% in July, the same pace as in June. That figure is below inflation, but signs of high inflation expectations still remain.
While a rise in wages is good news for workers in the short run, these pressures, together with higher costs of doing business overall while global demand slows, could mean that some businesses will hire fewer workers.
The decrease in the number of jobs has been mainly because of older women leaving the workforce, which is unsurprising. Sooner or later, an aging workforce will shrink as workers retire. This brought the labour force participation rate down to 64.7% from 64.9%.
Goods and services
Jobs in the goods- and services-producing sectors have been on divergent paths. In July, the gains in the goods-producing sector (23,000) were offset by the fall in employment in the services-producing sector (53,000).
The services-producing sector saw employment fall the most in the wholesale and retail trade (27,000), health care (22,000), and educational services (18,000).
The job decline in health care has not gone unnoticed. The exodus of burned-out health care workers from the profession has led to a surge in temporary closures of emergency rooms.
This has broad ramifications: When people are not taken care of, it leads to workers across industries calling in sick, taking time off to care for sick family members, or even exiting the workforce in more extreme circumstances. Those dynamics lead to lower productivity for the whole nation.
The takeaway
Canada’s GDP growth and job numbers have recently told a story of a slowdown and not a recession. But a recession is still possible. Amid slowing global demand and high inflation, the Canadian economy is not unbeatable, and unemployment might switch to an upward swing in the next few months.
