Ottawa’s unemployment rate remains low despite decline in public service workers

Statistics Canada said there were 51,000 fewer employees in the public sector in July, the first decline in that sector in a year.


Ottawa’s unemployment rate fell to 3.5 percent in July, one of the lowest rates in the country, despite a decline in public service employees.

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In its latest labor force survey, Statistics Canada said there were 51,000 fewer employees in the public sector in July, the first drop in that sector in a year. The decline was largely concentrated in Ontario and Quebec. Year over year, public sector employment increased 5.3 percent.

Canada’s unemployment rate stood at a record low of 4.9 percent, remaining unchanged from June, as the country continues to face a labor shortage.

The economy lost 31,000 jobs, marking the second straight month of job losses.

The number of self-employed workers increased by 34,000 last month. There was little change in the number of private sector workers.

Canada’s job market remains exceptionally tight, with more than a million job openings across the country. The unemployment rate is the lowest on record with comparable data going back to 1976.

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Statistics Canada says that despite labor shortages, there is no evidence of an increase in the proportion of people leaving or changing jobs.

CIBC Senior Economist Andrew Grantham noted that job losses in July were concentrated in the service sector, including wholesale and retail trade, education and health in a Friday morning note.

“With some of those sectors reporting high vacancy rates, labor supply rather than demand seems to be the main issue,” Grantham said.

The labor participation rate for Canadians between the ages of 25 and 54 is relatively unchanged from before the pandemic.

The pace of wage growth was also flat compared to June, with average hourly wages rising 5.2 percent year over year.

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The Statistics Canada report also looked at the current shortage of health workers, with a focus on nurses. According to Statistics Canada, more than one in five nurses worked paid overtime in July, the highest level since comparable data became available in 1997.

For comparison, about 10 percent of all other employees worked overtime in July.

As Canada faced the seventh wave of COVID-19 infections, 11.2% of nurses were on sick leave for at least part of the week when the workforce survey was conducted.

The Bank of Canada is paying close attention to employment levels in the country as it prepares to make its next key interest rate announcement in September, when it is expected to raise interest rates once again.

While economic growth is slowing across the country as the central bank tries to rein in inflation with higher interest rates, economists have pointed out that the tight labor market makes the slowdown unique in nature.

With Canadian Press archives

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