Unemployment Rate Edges Higher to 6.1% in March

Canada’s unemployment rate rose 0.3% in March, reaching 6.1%. While the increase is relatively small, a more meaningful — and disconcerting for job seekers and those whose current job is temporary or tenuous — insight is that the unemployment rate increased a full 1% on a year-over-year basis.

Sectoral Employment Trends

The sectors that shed the most jobs were accommodation and food services (-2.4%); professional, scientific and technical services 20,000 (-1.0%); and wholesale and retail trade (-0.8%). Conversely, employment increased in utilities (+4,300; +2.8%); health care and social assistance (+1.5%); construction (+1.0%); and finance, insurance, real estate, rental and leasing (+0.8%).

Self-Employment

The number of self-employed individuals fell 1.1% in March, somewhat offsetting a gain of 1.5% in February. On a year-over-year basis, self-employment was little changed in March.

Regional Employment Changes

Employment decreased in Quebec (-0.4%), Saskatchewan (1.0%), and Manitoba (-0.6%), while it rose in Ontario (+0.3%). There was little change in other provinces.

TD Economics Comment

Commented TD Economics: “The Canadian labour market lost steam in March, with the unemployment rate rising significantly. This continues the trend over the last year, where Canadian firms have been unable to absorb strong population-driven labour force growth. While this has brought the labour market into balance, it also means that more Canadian workers are unemployed —280k more since the beginning of 2023.”

Implications for Monetary Policy

As for what this means for businesses and individuals who are keeping a close eye on the Bank of Canada (BoC), most economists and markets are betting that a small rate cut is likely at the BoC’s next meeting in June — not because the unemployment rate is inching up, but because the inflation rate is trending down.

RBC Economics Comment

Commented RBC Economics: “The BoC as expected left the overnight rate unchanged in April while setting up the stage for a rate cut at its next meeting in June. Macklem in the press conference mentioned recent easing in inflation has `increased confidence that inflation will continue to come down gradually even as economic activity strengthens’. We continue to expect four cuts from the BoC this year at every meeting starting in June.”

Bank of Canada’s Previous Actions

The last time the BoC reduced the target overnight rate was in March 2020, when it plunged to an historic low of .25%, and remained at that level for two years.

Next Update

Statistics Canada will announce the unemployment rate for April when it publishes its next Labour Force Survey bulletin on May 10.

Sources:

Statistics Canada – Labour Force Survey, March 2024

RBC – Financial Markets Monthly

TD – Canadian Employment (April 2024)