Canada’s unemployment rate reached nearly its highest point since 2016 as the economy shed 66,000 jobs in August, according to new data from Statistics Canada.
The unemployment rate rose 0.2 percentage points in August to 7.1 per cent, a level last seen in May 2016 if the COVID-19 years of 2020 and 2021 were excluded, the data agency said.
The unemployment rate, or the number of people unemployed out of the total population, has been rising consistently this year, up from a 6.6 per cent rate in January.
Of the 66,000 jobs lost, they were largely in part-time work. Reduced hiring and layoffs largely fuelled those numbers, Statistics Canada said, with the layoff rate rising to one per cent in August, compared to 0.9 per cent at the same time last year.
The figures are more dire than some economists had predicted — a Reuters poll ahead of the release predicted a gain of 10,000 jobs and the unemployment rate to rise to 7 per cent.
Statistics Canada says most of the jobs lost — some 60,000 — were part-time ones, while there was little change in the number of full-time jobs. Most of the losses were also among workers between 25 to 54 years old, with little change in youth employment, according to StatsCan.
A critical metric, called the participation rate, that shows how many people were economically active — either in jobs or actively looking for them — was at 65.1 per cent, also at its lowest since the pandemic.
Employment fell across a number of industries, including some hit by tariffs. In particular, the scientific and technical services sector lost 26,000 jobs, while transportation and warehousing dropped 23,000 and manufacturing bled 19,000.
Persistent uncertainty around U.S. trade policy has kept Canadian businesses on tenterhooks, leading to minimal hiring and investment, affecting the job market and economic growth.
Construction, on the other hand, made gains, adding 17,000 new roles.
This comes after the economy lost a total of 41,000 jobs last month.
BMO chief economist Douglas Porter says that, plainly, today’s news is not good.
“Suffice it to say that this was worse than expected, and arguably the weakest jobs report since the pandemic days,” Porter said in a note.
He says the losses in tariff-exposed sectors show the impact of the trade war. He says the weak report could open the door to rate cuts by the Bank of Canada later this month, though with inflation remaining high, that factor hasn’t given them the “all clear.”
The central bank will announce its next interest rate decision on Sept. 17.
There was little change to employment for people between the ages of 15 and 24 in August, with youth unemployment staying high at 14.5 per cent.
That’s a decline by 0.1 percentage points from the month before. July saw the highest unemployment rate for that age group since September 2010 (again, outside of the pandemic years).
How did the Gen Z job market get so bleak?
The data paints a picture of a difficult summer for students looking for work. From May to August, the unemployment rate for students returning to school in the fall was 17.9 — per cent — the highest since summer of 2009.
Gen Z students and recent grads have previously told CBC News about their struggles to find work, with some saying they’d applied to hundreds of jobs over a series of months with no success.
A report by Desjardins Thursday argued the rise of gig work, artificial intelligence and rapid population growth were among the factors souring job prospects for Canada’s youngest workers.
Much of the current employment struggles for youth traces back to the COVID-19 pandemic recovery, LJ Valencia, an author of the Desjardins report, said. At a time when businesses were hungry for labour, Ottawa ramped up the inflow of foreign workers and loosened restrictions on international students to meet demand.
“Job opportunities are declining, because the economy can’t keep up with this state of population growth,” he said.
The rise of the gig economy — app-based and often precarious work — also often limits the participation of younger people, as some apps require users to be at least 18, effectively shutting out anyone younger.
Desjardins also cites a Stanford University study published last week that found while core-working-age U.S. employees have so far faced minimal job disruption from AI, youth are starting to see employment losses.
