Region's unemployment rate falls to 6.2% in August as labour force shrinks amid job losses

Parliament Hill stock photo

Ottawa-Gatineau’s jobless rate fell nearly a full percentage point in August to its lowest level since the pandemic began – a dip that was largely the result of thousands of residents dropping out of the labour force.

The local unemployment rate dropped to 6.2 per cent last month, down from 7.1 per cent the previous month and its lowest level since February 2020, Statistics Canada said Friday in its latest labour market report. 

But that seemingly good news came with a big caveat. Employers in Ottawa-Gatineau shed a net total of 3,300 jobs in August, and the unemployment rate dropped mainly because of a mass exodus of 12,100 people from the labour force, which includes residents who are searching for work.

It marked a dramatic about-face for the local economy, which had been steadily regaining steam as pandemic-related restrictions eased over the past few months. 

After total employment rose to more than 782,000 in July – its highest level in 17 months – it fell back to 779,000 in August. The total labour force, meanwhile, dropped from 842,600 in July to 830,500 last month.

While the region’s largest employer, the public administration sector, held relatively steady in August, the education sector lost a net 4,400 jobs and retailers were down a net 2,900 positions. The tech sector also cooled off slightly after five straight months of gains, shedding a net total of 900 positions.

Sectors that posted increases included health care (up a net 1,200 jobs) and accommodation and food services (up a net 800).

Nationally, Canada’s economy added 90,000 jobs in August, the third consecutive monthly increase, Statistics Canada reported.

The unemployment rate fell to 7.1 per cent for the month, compared with 7.5 per cent in July, bringing the rate to the lowest level since the onset of the pandemic last year.

Gains were concentrated in full-time work and in the hard-hit service sector, led by gains in accommodation and food services as restrictions eased in much of the country.

Employment increased in Ontario, Alberta, Saskatchewan and Nova Scotia in August, with little or no change in all other provinces.

British Columbia remains the lone province with employment above pre-pandemic levels.

Participation rate fell

Statistics Canada says gains in the service sector pushed employment there back to pre-pandemic levels for the first time, although there are still some areas that are lagging, such as retail and food services.

The agency says overall employment is within 156,000 jobs, or 0.8 per cent, of the level recorded in February 2020 before the onset of the COVID-19 pandemic.

That's the closest the country has been to recouping all the jobs lost during the first wave of COVID-19.

Still, there are a few flies in the ointment, says CIBC senior economist Royce Mendes, who noted the participation rate fell in August, which helped push down the unemployment rate.

Statistics Canada says the unemployment rate would have been 9.1 per cent in August, down from 9.5 per cent in July, had it included in calculations Canadians who wanted to work but didn't search for a job.

“The economy is still a long way from being fully healed,” Mendes writes in a note.

“While employment according to the labour force survey is only 0.8 per cent below its pre-Covid level, other indicators of the economy suggest more weakness. The country is also now in the midst of a fourth wave which will restrain growth this fall.”

– With additional reporting from the Canadian Press