- After five months anchored at 5.0 per cent, the unemployment rate in Canada rose by 0.2 points to 5.2 per cent. This was the first increase in the jobless rate since August 2022. Meanwhile, employment was largely unchanged in May, while the participation rate inched down to 65.5 per cent.
- Among the good-producing industries, the employment swings on the previous month were all positive, though mostly small. Manufacturing recorded the largest increase, with employment rising by 12,900. Among the services, there was a notable decline in business, building and other support services (–31,100). Employment also fell in the professional, scientific, and technical services industry, the first decline in this sector since January 2022. The largest employment increases occurred in the “other services” industry (+11,000) and accommodation and food services (+10,600).
- Across Canada, employment fell in 3 of 10 provinces. Declines were recorded in Ontario (–24,000), Nova Scotia (–5,200) and Newfoundland and Labrador (–4,200). The only province in which employment rose was Manitoba (+8,200). Employment remained largely unchanged in the remaining provinces.
- Average hourly wages rose by 5.1 per cent on a year-over-year basis, marking a slight deceleration on the previous month’s pace of 5.2 per cent.
The proliferation of artificial intelligence technologies is set to significantly disrupt the labour market. Having surpassed one hundred million users in just two months, ChatGPT is the fastest growing consumer application in history. This easy-to-use, widely applicable tool may boost productivity and fuel new job creation while raising the spectre of accelerated automation and potential labour displacement. A recent survey by the World Economic Forum found that roughly a quarter of all jobs are likely to change in the next five years, with technology the principal driver of this change. While the net impact of AI on employment, wages and inequality is hard to quantify, the coming years will see higher levels of labour market churn as the occupational landscape and demand for skills evolve.
This week, the Bank of Canada’s benchmark interest rate climbed to its highest level since 2001. The move reflects concern about sticky inflation and above-expected growth in the first quarter of the year. Meanwhile, following a sustained period of job growth, the number of Employment Insurance recipients has fallen to a record low with high inflation, abundant job opportunities and wage growth acceleration drawing workers to the job market. As the lagged impact of monetary policy builds, we forecast slowing economic growth over the coming quarters. As demand weakens, the risk of job losses will increase and hiring among firms will continue to slow, causing the unemployment rate to rise further.
After job vacancies spiked above one million in the second quarter of 2022, the indicators increasingly point to cooling labour demand. On the supply side, the government is seeking to bolster the labour force by pursuing record levels of immigration and making it easier for firms to hire temporary residents. A rise in international migration to Canada in 2022 saw the population expand by over one million, a record increase. Immigration is important given Canada’s low fertility rate and ageing population. However, to better harness Canada labour potential, policymakers must also work to reduce skills mismatches that stop workers already present in Canada from moving into employment.
For a timely read on hiring activity by province, city, industry, and occupation, please see the latest monthly edition of our Canadian Hiring Index.