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Canada’s labor market is stronger than expected, but most weren’t expecting much. Today’s Statistics Canada (Stat Can) Labor Force Survey (LFS) update shows the economy added more jobs than expected in November. However, the data also revealed more laborers were added than work, boosting unemployment. The trend is seen continuing near-term, with recent immigrants bearing the brunt. Most were struggling to find the relevant work they were sold on at record low unemployment. It doesn’t get easier as competition rises for roles in a downturn.
Canada Is Adding More Workers Than Jobs
Canadian employment improved slightly, surpassing analyst expectations. Employment rose 0.1% (+25k) to 20.1 million in November, in contrast with a consensus forecast of 14k jobs. The jobs added failed to meet the 36k laborers the economy added over the same period. This helped push the unemployment rate 0.1 points higher to 5.8%, the highest rate since January 2022. It’s a little different this time, with elevated inflation limiting stimulus.
Canadian Unemployment Is On The Rise
The seasonally adjusted Canadian unemployment rate.
Source: Statistics Canada.
Manufacturing & Construction Wins, Everything Else Lost
A couple of industries won big last month, but more industries lost out. Producers such as manufacturing (+28k) and construction (+16k) saw the biggest job gains. In contrast, the biggest losses were seen in wholesale (-27k), and finance & real estate (-18k). Considering the last segment has been driving the economy, that’s likely not great news.
Canada’s Immigrant Boom Is Struggling To Find Relevant Work
Stat Can made a special note, calling out employment struggles with recent immigrants. There was supposedly a skilled labor gap that was sold as an opportunity to immigrants. However, 6 in 10 recent immigrants struggled to find relevant work over the past 2 years. If they thought it was hard during record low unemployment rates, it’s about to get a lot harder. Banks like CIBC are expecting the erosion in work to continue until mid-2024, when rates are cut.
In the meantime, this presents a potential hiccup in growth for the country. Immigration represents virtually all (98%) of the country’s population growth. The recent boom invited immigrants to address the country’s skilled labor gap. Those opportunities seem to be a lot more scarce than presented.
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