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Canada’s Unemployment Rate Hits its Highest Point Since 2017
As the job market remains dismal, the national unemployment rate in Canada has risen to its highest point since 2017. This has led some analysts to question whether the Bank of Canada should be reducing interest rates more quickly.
In spite of a net gain of 22,000 jobs, Statistics Canada reported on Friday that the unemployment rate increased to 6.6% from 6.4% the previous month. The rise was due to an uptick in part-time employment and a fall in full-time employment.
Outside of the pandemic years, the national unemployment rate has reached its highest position since May 2017, according to StatCan.
Rapid population expansion in Canada has increased the overall labour pool, but the country’s unemployment rate has persisted in rising.
The summer job market was especially tough for students, according to StatCan. Not including the pandemic, the unemployment rate among students going back to school in the autumn was 16.7 percent, which is the highest level since 2012.
Two days after the Bank of Canada dropped interest rates for the third time in a row, reducing borrowing costs to alleviate economic pressure, the most recent reading of the Canadian job market follows suit.
According to TD Bank economist Leslie Preston, who wrote a note on Friday, the central bank is “giving the OK” to keep dropping rates due to the bad August jobs report. Preston predicts two more quarter-point decreases at the remaining decisions this year.
According to CIBC senior economist Andrew Grantham, there are indications that the labour market is quickly contracting more than initially thought, since the unemployment rate is nearly two percentage points greater than the record low of 4.9% in June 2022.
“Due to this, we believe the Bank should be contemplating a quicker rate of reductions in order to bring interest rates to less restrictive levels,” he informed clients in a letter on Friday morning.
