Canada’s jobless rate hits a record low
The unemployment rate fell to another record low in April even as the pace of job creation slowed, suggesting a tightening of the labour market.
Statistics Canada said Friday the jobless rate fell to 5.2 per cent for April, as the economy added 15,300 jobs. That’s down slightly compared with the previous record low unemployment rate of 5.3 per cent set in March, when 72,500 jobs were added.
“All of these indicators that we look at all tell the same story, and that is a story of a shrinking labour pool and an overheated labour market,” said Tu Nguyen, economist with accounting and consultancy firm RSM Canada.
Nguyen pointed to the record low unemployment rate of 4.3 per cent for core-aged workers aged 25 to 54 and the lowest rate of involuntary part-time employment on record at 15.7 per cent as indicators of how tight the job market has become.
Statistics Canada also said the adjusted unemployment rate — which includes people who wanted a job, but did not look for one — was 7.2 per cent in April, below the prepandemic level of 7.4 per cent.
Bank of Montreal chief economist Douglas Porter said the moderate gain in employment is a sign of much more normal conditions, but also one where the supply of new workers may be beginning to be the binding constraint on growth.
“For the Bank of Canada, this will do nothing to dissuade them from their tightening path, not with headline inflation aiming at seven per cent,” he wrote in a note to clients.
Inflation in March reached 6.7 per cent, and the Bank of Canada has said it expects inflation to average almost six per cent in the first half of the year. The central bank has indicated additional interest rate hikes are on their way.
“The one item of news here that may help contain just how much the Bank ultimately needs to hike is the ongoing calmness of wages,” Porter said.
Average hourly wages were up 3.3 per cent year over year in April, compared with a year-over-year gain of 3.4 per cent in March.
Statistics Canada did note that the proportion of those making less than $20 per hour in April made up 25.9 per cent of all employees, down from 35.5 per cent in April 2019. Employees earning $40 or more per hour represented 24.5 per cent of employees, up from 18.0 per cent three years earlier.
The jobless rate in April fell to its lowest point since at least 1976, which is as far back as comparable data goes, as the number of jobs in professional, scientific and technical services rose by 15,000 in April and the public administration category gained 17,000.
The number of people working in retail trade fell by 22,000 in April and those working in construction dropped by 21,000.
However, the effects of the pandemic continued to be felt in the economy, as the total hours worked in April fell 1.9 per cent compared with March, due in part to illness-related absences from work. A blizzard in Manitoba also affected the hours worked in that province.
Looking ahead, Nguyen said she expects the job market to remain tight through the summer as business and consumer demand remain strong and workers can’t materialize out of thin air.
“Businesses and consumers still have quite a lot of savings from the pandemic and they are still going out purchasing goods and services and we don’t have a whole lot of additional supply to the labour market,” she said. However, Nguyen said she’s watching the proportion of longterm unemployed among the jobless.