Region's unemployment rate falls to 18-month low in September as labour market shrinks

Ottawa skyline

Ottawa-Gatineau’s unemployment rate fell to an 18-month low of 5.5 per cent in September, Statistics Canada said Friday.

But just like in August – when the rate dropped nearly a full percentage point to 6.2 per cent – September’s jobless picture isn’t as rosy as it might look. The economy shed more than 10,000 jobs last month, and the decline in the unemployment rate was driven largely by Ottawa-Gatineau’s shrinking labour force as potential workers gave up their search. 

The labour force, which includes people who are looking for work, contracted by 16,800 in September, suggesting that many residents have given up trying to find employment.

It marked another sharp reversal for the local economy, which had been steadily regaining steam as pandemic-related restrictions eased over the summer. 

After reaching more than 782,000 in July – its highest level in 17 months – the total number of working people in Ottawa-Gatineau fell to 768,600 in September. The labour force, meanwhile, shrank to 813,700, its second straight monthly decline.

Virtually all industries felt the pain, with the struggling retail sector (down a net 4,900 jobs) and educational services (down 4,000 positions) among those taking the biggest hits.

The region’s biggest employer, public administration, was one of the few bright spots last month, gaining a net 2,400 jobs.

National gains

Nationally, Statistics Canada says the economy added 157,000 jobs in September, bringing employment back to pre-pandemic levels for the first time.

The unemployment rate fell to 6.9 per cent, down from 7.1 per cent in August.

Statistics Canada says the unemployment rate would have been 8.9 per cent in September, down from 9.1 per cent in August, had it included in calculations Canadians who wanted to work but didn't search for a job.

The last time Canada had this large an employment gain was in June 2021, when the economy added 231,000 jobs.

The statistics agency says the job gains were widespread, but concentrated in full-time work and evenly split between the public and private sector. Gains were also notable in industries where many workers continue to work remotely.

Still, the ranks of long-term unemployed who have been without work for six month or more remained little changed last month and were still double the number recorded in February 2020.

Leah Nord, senior director of workforce strategies with the Canadian Chamber of Commerce, says the fact that nearly 400,000 Canadians are long-term unemployed should put a pause on any celebrations, particularly with no data to explain why they haven't been able to rejoin the labour force in months.

'Canadians want to work'

“Canadians want to work, most are not unemployed by choice, so we need to dig down and find out exactly what's holding them back so we can make evidence-based decisions,” she says in a statement.

“Our full economic recovery depends on it.”

Employment also fell by 20,000 in retail trade in September, bringing employment in the sector to within 71,000 jobs, or 3.1 per cent, of its February 2020 level. Statistics Canada notes that despite the easing of restrictions across Canada, employment in the industry has been around the same level since June.

A similar story played out in the hard-hit accommodation and food services sector, which saw its first decline in five months as 27,000 jobs were lost after gaining 211,000 positions between May and August.

The statistics agency also notes the employment rate remains just below the pre-pandemic figure, reflecting the fact that job growth hasn't matched population growth over the past 19 months.

CIBC senior economist Royce Mendes says the headline figures for the month likely seal the deal for the Bank of Canada to further ease the pace of its bond-buying program later this month.

He adds that there is still a ways to go to fully heal the labour market.

– With additional reporting from the Canadian Press