Unemployment dip 'bit of a headfake,' says economist

Canada’s unemployment rate dropped in September for the first time since January, according to the latest Statistics Canada (StatsCan) Labour Force Survey (LFS) released on Friday.

The StatsCan report shows a modest rise in employment in September, coinciding with a slight decrease in the unemployment rate, which edged down to 6.5% from 6.6% the previous month.

"[It’s] better than what we’ve been used to, but still not great,” said Indeed senior economist Brendon Bernard.

“September job numbers offered a slight reprieve from the trend of flat LFS readings in recent months. However, the seemingly solid 47,000 employment increase failed to keep up with the 110,000 jump in population, so once again the employment rate slipped.” 

Despite positive signs, the overall employment rate dropped by 0.1 percentage points to 60.7%. StatsCan noted that “employment growth was outpaced by growth in the population aged 15 and older,” a trend that’s been continuing since early 2023.

Youth and women drive employment gains

September’s job growth was driven primarily by youth aged 15 to 24, with an increase of around 30,000 jobs (+1.2%). Employment gains were seen among both young men and women. Core-aged women (25 to 54 years old) also saw a boost in employment, adding about 19,000 positions (+0.3%), while employment levels for core-aged men remained stable.

Full-time employment increased significantly by roughly 100,000 jobs (+0.7%), marking the largest rise since May 2022. This was partially balanced out by a reduction in part-time employment, which saw a decline of around 60,000 positions (-1.7%).

While part-time jobs (+2.0%) grew faster on a year-over-year basis than full-time positions (+1.4%), the shift towards full-time work in September signals a potential shift in the job landscape.

“More positively, full-time employment jumped up, as did jobs in the private sector. However, total hours worked, which tend to be volatile, slipped,” says Bernard.

“The unemployment rate provided a bit of a headfake, as its downtick to 6.5% came from slightly lower labour force participation. Ultimately, the employment rate is probably the best barometer of the job market’s health, and over the past year, it’s declined in all but one month.” 

Sectoral breakdown: growth in information and trade

Employment rose across various industries in September, with notable gains in information, culture, and recreation (+2.3), as well as wholesale and retail trade (+0.7%). Professional, scientific, and technical services also saw an increase of approximately 19,000 jobs (+1.0%), recovering from declines seen in August.

Provincially, Ontario led the job gains, adding around 40,000 jobs (+0.5%), largely in full-time positions. This extends the province’s growth trend, which has seen nearly 180,000 new jobs since December 2023. The unemployment rate in Ontario decreased slightly to 6.9%.

Quebec also saw an increase of around 20,000 jobs (+0.5%), also in mostly full-time roles, though the unemployment rate remained steady at 5.5%. Manitoba and Nova Scotia each posted gains, with Manitoba adding roughly 4,600 jobs (+0.7%) and Nova Scotia gaining about 2,700 jobs (+0.6%).

Job vacancies in Canada fell by 59,000 (-9.2 per cent) to 582,600 in the second quarter of 2024, according to previous StatCan data.

Regional disparities: declines in British Columbia and New Brunswick

In contrast to the gains seen in other provinces, British Columbia experienced a decline, losing about 16,000 jobs (-0.6%)—the most significant drop since May. The employment rate in British Columbia fell to 60.0%, down from both August and the same time last year.

New Brunswick also reported a decrease of approximately 3,700 jobs (-1.0%), the first significant drop in a year.

Average hourly wages rose by 4.6%, adding $1.58 per hour and bringing the national average to $35.59. While this steady increase mirrors the growth observed in August, wage disparities remain among demographic groups, especially recent immigrants, who reported higher instances of overqualification in their fields.

“Wage gains have been a bright spot for an otherwise limping job market over the past year, but will come back to earth eventually,” Bernard says.

“However, as with all LFS data, one month doesn’t make for a trend.”