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Canada lost 17,000 jobs in May, pushing the unemployment rate up to 5.2 per cent, according to a Statistics Canada report released Friday morning.
The decline is primarily driven by a 77,000 loss in jobs among youth aged 15 to 24. Meanwhile, employment increased by 63,000 among people aged 25 to 54. Men in this age range represented two-thirds of this growth, gaining 43,000 jobs.
Statistics Canada says the overall employment rate was “virtually unchanged,” with only a 0.1 per cent decrease in May. This is the first time since August 2022 that Canada has lost jobs; 326,000 jobs were gained between September 2022 to January 2023.
Average wages rose to $33.25 — a 5.1 per cent year-over-year increase. While the inflation numbers for May have not yet been released, this marks the fourth month in a row when the year-over-year wage increase is on track to outpace inflation, which was 4.4 per cent in April.
Statistics Canada reports that the industries that lost the most jobs in May were business, building and other support services, which lost 31,000 jobs, equivalent to a 4.4 per cent decline overall.
There were also 40,000 fewer self-employed workers, according to the report.
Youth can’t find work
Shaziah Jinnah Morsette, president of the University of Calgary Students’ Union, has been seeing students at her university struggle to find employment first hand. She says one in five students it recently surveyed have been able to find full-time work this summer.
“Often, this isn’t just summer full-time work that they want; it’s summer full-time work that they need,” said Jinnah Morsette, whose union represents over 28,000 undergraduate students. “That cost-of-living crunch, that affordability crunch is being really felt by post-secondary students, and has been for years.”
Jinnah Morsette says, in order to make ends meet, students will often settle for jobs that don’t develop skills relevant to their field of study or the careers they’re pursuing.
Dawn Desjardins, chief economist at Deloitte, says this is not uncommon.
“You do get those first jobs where you’re really learning skills that you don’t necessarily have from your education,” she said. “So yes, I think there’s a mismatch in a lot of ways across the economy in the labour market.”
However, Desjardins believes that the reality is not as “deep and dark” as it first appears, and should not be an immediate cause for concern.
“We see a lot of volatility in these numbers,” she said.
In Alberta, the youth unemployment rate was 11.3 per cent this May — double the overall provincial unemployment rate of 5.7 per cent, according to Statistics Canada.
Statistics Canada reports a particularly acute change in youth employment for returning students, especially young women between the ages of 20 and 24. In this group, although 69.5 per cent were employed in May 2022, only 63.8 per cent are employed as of this May. That is four per cent lower than the pre-pandemic rate recorded in May 2019.
“The landscape has changed,” Jinnah Morsette said. “This isn’t anything like 25 years ago where you could easily find a job over the summer [and] work to pay your year of tuition ahead.”
She said that the need to work increased hours takes students’ time away from extracurriculars, volunteering and their studies — all experiences that assist students when looking for jobs after graduation.
“Students aren’t able to access those things because they’re having to choose to take on those extra hours to continue to cover their bills,” said Jinnah Morsette. “That does take a toll — not only on their grades, but also on their mental health and their well-being.
“That leaves the Alberta economy behind — it leaves our Canadian economy behind.”
Service surge?
Although unemployment rose overall this past month, certain industries experienced job growth — including accommodation and food services, which gained 10,000 jobs in May.
“We are seeing people come to the doors asking for work,” said Denis Pires, general manager of the restaurant Bairrada Churrasqueira in Toronto. “However, they’re not qualified for the positions that we’re looking for.”
But compared to last year when there were fewer customers and more safety concerns from staff because of the pandemic, Pires says the atmosphere has changed. At their restaurant, the challenge now is the need to spend additional time and resources to train the new hires.
“The government stimulus has stopped, which is a big thing,” said Pires. “I think that is promoting people to look for jobs and be more serious.”
David Glantz, the owner of Archive Tattoo in Toronto, is looking to hire one more team member, but he isn’t too concerned.
“We’ve always hired for talent over over names,” he said. “Hiring was never really a tough thing.”
Since the pandemic, however, Glantz says they have moved away from a percentage-based system of earnings to a more flexible model.
“We’ve chosen to adapt to a new direction where everyone pays the chair fee for their space and that way they can sort of manage their own schedules,” he said. “If people work as much as they want to, they have the ability to control their own income, which can work out exceptionally well for them.”
Interest hikes could slow
Economists say that this rise in overall unemployment casts doubt on future interest rate hikes from the Bank of Canada.
“While one weak labour market report doesn’t make a trend, the [Bank of Canada] will be closely watching to see if other cracks start to form,” James Orlando, senior economist for TD Bank, wrote in an email.
Jay Zhao-Murray, an analyst for Monex Canada, said in a note because of the “details and composition of employment changes, we do not think it would materially change the Bank’s latest view on the economy.”
Some 22,000 new jobs were added to the economy last month. The Bank of Canada believes this number is too strong. Andrew Chang talks with Stephanie Hughes from the Financial Post to understand how the numbers are throwing a curveball into the economy.
But one month of a weakening jobs market may not be enough.
“The Labour Force Survey is notoriously volatile,” Royce Mendes, managing director and head of macro strategy at Desjardins, wrote in an email. “It would need to be corroborated with a host of additional information to change our view that the Bank of Canada will hike again in July.”
“When things will kind of slow down a bit, we’ll be judging through a whole set of measures, trying to figure out whether things happen,” said Bank of Canada Deputy Governor Paul Beaudry in a speech to the Victoria Chamber of Commerce on Thursday. “But we won’t only look at one measure.”
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