For the second straight month, Canadian employment was essentially unchanged (-2.8k), disappointing expectations for a modest 25k gain. Full-time positions rebounded (+62k), but were offset by sizeable part-time job losses (-64k).
The unemployment rate also remained unchanged at 6.4%, as a slight decline in the labour force (-0.1% month-on-month (m/m)) offset job losses. The decline in the labour force came despite continued growth in population (0.4% m/m), as the labour force participation rate continued to fall to 65% in July.
Although population aging has put downward pressure on the labour force participation rate, the most recent year-over-year decline in July 2024 largely reflected declines among people under the age of 65.
Looking across sectors, job gains were concentrated in the public sector (+41k). The private sector lost jobs in July (-42k). Wholesale and retail trade led the private sector in job losses (-44k), while finance, insurance and real estate (-15k) also shed jobs.
Unemployment rates for recent immigrants to Canada and youth continued to rise. The unemployment rates for immigrants who have landed in Canada within the last five years rose 3.1 percentage points to 12.6%. And it continues to be a cruel summer for students (aged 15 to 24), with the employment rate was 51.3% in July – the lowest since 1997 (outside of the pandemic 2020).
Lastly, total hours rebounded in July (1.0% m/m), leaving them up 1.9% over the past year. Wage growth cooled modestly to 5.2% year-on-year in July.
Key Implications
July’s job market report was a bit of a mixed bag on the surface, but most trends are consistent with a labour market that continues to cool. Sure, full-time jobs rose, but over the past year part-time employment (+3.4%; +122,000) has grown at a faster pace than full-time employment (+1.4%; +224,000). Recent immigrants and youth are facing a particular deterioration in job market conditions.
The labour market is giving the OK for the Bank of Canada to continue its gradual quarter-point cut per rate announcement pace. We expect the Bank to cut interest rates three more times this year (see rates forecasts).
