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Canada’s unemployment rate falls amid a chronic worker shortage
May 6, 2022
Authored by RSM Canada LLP
Joe E. Reilly, CPA, CA, CBV shared this article
REAL ECONOMY BLOG | May 06, 2022
Canada added 15,000 jobs in April and the unemployment rate fell slightly to 5.2% as the job market remained heated, according to data released by Statistics Canada on Friday.
There is no sign that this tight market will ease any time soon. In addition to the modest number of jobs added, the unemployment rate among core-aged workers (ages 25 to 54) hit a record low, at 4.3%, as did the involuntary part-time unemployment rate, at 15.7%.
Faced with a rising cost of living because of higher inflation and enticed by attractive wages, some Canadians who retired at the onset of the pandemic are returning to work, which helps fill some vacancies.
But don’t count on this return to solve the long-term challenge of the worker shortage because this group will stay in the workforce only for a few additional years at most.
Employment among core-aged women keeps breaking records, rising by 0.7%, or 43,000 jobs. That gain was partially offset by a 36,000-job decline in employment among core-aged men.
The services-producing sectors led the job gains, adding 31,400 while the goods-producing sectors lost 16,000 jobs, particularly in construction (20,000). The most notable gains occurred in the professional services (15,100); educational services (12,500); information, culture and recreation (12,600); and public administration (16,500).
Male youth unemployment (ages 15 to 24) rose by 22,000 jobs (15%) as more youths entered the labor market. This group could be an important source of labor supply as many jobs in the service industry, from restaurants to retail, are filled by youths.
The 2021 census data revealed that Canada’s working-age population is older than ever, which suggests that worker shortage with only continue in the years ahead. Even ambitious immigration targets, which call for more than 400,000 immigrants per year through 2024, might not be enough to compensate for the retiring workers and to fill the future gap in the labor market.
The tightening job market adds pressure for the Bank of Canada to further raise interest rates, which will most likely reach 2% by the end of the summer, a much faster pace than previously anticipated. At the same time, the job market will remain tight with low unemployment rates across demographic groups as demand remains strong.
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This article was written by Tu Nguyen and originally appeared on 2022-05-06 RSM Canada, and is available online at https://realeconomy.rsmus.com/canadas-unemployment-rate-falls-amid-a-chronic-worker-shortage/.
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