It only gets tougher to find jobs in Canada as the youth unemployment rate reaches multi-year highs.
The unemployment rate in Canada had risen in June as it recorded a net loss of 1,400 jobs for the country’s economy. This event also contributed to an unemployment rate of 6%, which was higher than the previous years. The unemployed rate in June was at its highest in 29 months, and some economists refer to it as a jobless recovery. Unemployment has been increasing gradually for the past year, with forecasting that it will rise up to 3% by April 2023, whereby it will greatly affect jobs in Canada.
An increase in youth unemployment is becoming noticeable throughout the globe.
Of greater concern, however, is the growing unemployment trend among youths within Canada as a result of this current economic crisis. The rate was raised by 0.1% of the student population, increasing it to 13 percentage points. 5%, the first time it has been this high since September 2014, without counting the COVID-19 period. Statistics Canada has attributed this trend to rising work insecurity, a factor that is now as demanding for both youth and middle-aged men.
Wage Growth vs. Job Losses
However, the job prospects do not look as bright, with average hourly wage growth for permanent employees being up at a rate of 5% on an annual basis. 8% in June compared with 5. Percent, data released in May showed a 2% wage growth, the fastest since December; this wage growth triggers inflation as observed by the BoC.
Nevertheless, this growth in wages occurs independently of employment changes and may be affected by several factors—employment structure and base-year distortions. In a recent development, BoC Governor Tiff Macklem pointed out that, despite a slowdown in the creation of new jobs, it is not impossible to attain the inflation targets set by the Federal Reserve without a considerably high rate of unemployment. He also pointed out that further economic growth and increased employment could be achieved without going over 2% inflation.
Economic Data and Market Responses
Canadian job data led to a slight strengthening in the value of the Canadian dollar and a decline in the yields on Canada’s two-year government bonds. These downward trends in jobs have raised the possibility of a July interest rate cut. Following a surprising inflation increase in May, money markets initially lowered their probabilities for a rate cut; however, the job report has now pulled it back up to 55%.
The central bank has indicated that it cut its key policy rate for the first time since June 2013 by 0.25 percentage points on Monday and may continue to do so if inflation cools further. The next monetary policy release is due on July 24 after the announcement of the new inflation number on July 16.
Sector-specific employment changes
June also marked a sharp rise in the number of employees letting go of full-time employment, while that of part-time employment rose slightly. Agriculture and the goods sector gained 12,600 net positions, while all sectors within the services category lost 14,100 net positions, especially transportation and warehousing, as well as information, culture, and recreation. All in all, unemployment increased in June 2011 to 3%. Average of 1% less than the value of the previous month and amounted to $1.4 million.
