Canada’s unemployment rate increased to 6.6% in August, reflecting a challenging summer job market, particularly for students.
Although the economy added 22,000 jobs last month, employment growth lagged behind population expansion, according to Statistics Canada.
Employment rose in sectors like education, health care, and finance, while it declined in utilities, natural resources, and professional services.
Students, however, faced the brunt of the slowdown, experiencing their highest summer unemployment rate since 2012, excluding 2020.
Their jobless rate averaged 16.7% between May and August, up from 12.9% the previous year.
The situation was even tougher for Black, Chinese, and South Asian students.
Black students had an unemployment rate of 29.5%, a dramatic 10% increase from 2023.
This comes on the heels of the Bank of Canada’s third consecutive interest rate cut, aimed at stimulating the economy.
However, despite these measures, the labor market remains sluggish, with 1.5 million unemployed Canadians in August—up 22.9% from a year earlier.
The report noted that 16.7% of those unemployed in July found work in August, a smaller proportion compared to the same period last year.
Despite slow hiring, businesses are still increasing wages.
The average hourly wage in August rose by 5% year-over-year to $35.16, allowing many workers to regain pre-pandemic purchasing power.
Yet, wage growth has not been uniform.
Recent immigrants saw their wages fall by 1.3%, while Canadian-born workers and more established immigrants experienced wage increases of over 6%.
As the Canadian labor market faces headwinds, questions remain about whether wage gains will keep up with inflation and if the economy can regain momentum as we move into the fall.
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