Unemployment rate spikes despite more jobs

Jun 11, 2024 | Biz/Tech, Canadian News

The unemployment rate increased to 6.2 per cent from 6.1 per cent despite adding 27,000 jobs in May, stemming from changes in demographics and industrial sectors.

The unemployment rate increased by 0.1 per cent in May and 0.9 per cent year-over-year. However, the overall employment rate remained stable with two per cent increase on a year-over-year basis with shifts among gender and age groups.

“Employment rose by 48,000 for young women aged 15 to 24 in May, the first increase in nine months, while employed male youth declined by 23,000,” a Statistics Canada report said.

Andrew Fields, senior analyst at StatsCan, explained the cause of the increasing unemployment rate and when it was the lowest.

“The upward trend in the unemployment rate is a general trend because the labour market has been cooling since the end of 2022,” he said, “In July 2022 it was at a record low of 4.8 per cent and then it started going up.

“In data, like job vacancies and wage surveys, the number of businesses with vacant positions has declined,” Fields said.

Fields said after the pandemic, things were going well as things were reopening.

“The labour market was strong with record number of job vacancies. Unemployment rate was at record low as businesses were hiring more people,” he said.

According to StatsCan, Ontario, Manitoba and Saskatchewan recorded employment increases, and Alberta, Newfoundland and Prince Edward Island saw a decline.

“We’ll have to see how things turn out because it doesn’t point to a long-term change because long-term employment again in Alberta is up,” Fields said, “It doesn’t signal anything out of the ordinary yet. It’s not as if we’ve seen six months of decline.”

According to the report, health care and social service jobs increased by 1.1 per cent, professional, science and technical services increased by five per cent and employment in construction decreased by 2.2 per cent year-over-year.

“Employment in construction declined by 30,000 in May 2024,” StatsCan said.

“There’s a lot of different factors, but overall, we don’t see a lot of investment into residential construction,” Fields said.

Fields also said regional variations were present in the report where areas had more population growth than employment growth because of immigration.

Employment in Ontario grew by 50,000 in May and 150,000 in the last year. However, the total increase in population was 1.9 per cent more than the increase in employment.

“Some areas are getting more populated than others, mostly due to immigration,” Fields said. “People are looking for work and are not able to find it as the population grows. So, even though employment is growing, it’s not growing as fast as the population.”

In a survey on business conditions, StatsCan said the pressure from labour-related obstacles will be on the rise in the future.

According to StatsCan, “43.5 per cent of businesses expect to face labour-related obstacles over the next three months. Recruiting skilled employees is the most anticipated labour-related obstacle.”

In the U.S., the unemployment rate also increased to four per cent from 3.9 despite the economy adding 272,000 jobs. The U.S. Department of Labor said applications for unemployment benefits rose to 229,000 from 8,000.