August Unemployment Report

Canada’s unemployment rate rose 0.1 percent in August to 7.1 percent, basically keeping us right where Canadians were four years ago.

Quebec and Ontario were responsible for all job gains last month, with job increases of 22,000 and 11,000, respectively. Elsewhere, six out of ten provinces reported job losses last month, and Alberta saw a very modest rise with 2,700 new jobs. Full-time jobs across Canada increased by 52,200, which was not quite enough to reverse July’s 71,400 drop.

The economy is stuck in a rut, according to Douglas Porter, chief economist and managing director of economic research at BMO Financial Group. The economy “is mired in an extended period of very sluggish growth, which in turn is keeping job growth very sluggish as well — overall economic growth and job growth are normally very tightly related,” said Porter.

“Slow job growth means that the unemployment rate doesn’t improve, and indeed it has been held steady at close to seven percent for almost four years.”

The overall idleness afflicting the Canadian economy has real consequences: it keeps a lid on wage increases, inflation, and interest rates. It also reduces tax revenue, limiting spending options for provincial and federal governments.

Canada’s economy is part of a global trend leading towards an economic slowdown. Societies, in general, are ageing, and the growth in working age population globally has plodded strikingly during the past ten years. The 2008 financial crisis also did not help, and its aftershocks are still felt today. “The TSX index is now no higher than it was in the spring of 2008 — so that is more than eight years with no net gains in the overall Canadian stock market,” Porter said.

Also, the plunge in oil prices has not only deeply affected Alberta, leading to massive job losses during the past months, but it also had a profound impact on the rest of Canada. Porter said: “As a significant oil producer and exporter, we are very vulnerable to lower oil prices and have been hit hard by the slide in crude prices in the past two years.”