Ottawa-Gatineau’s jobless rate rises to 5.5% in May as economy sheds 4,700 jobs

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Ottawa-Gatineau’s unemployment rate jumped to 5.5 per cent in May, continuing an upward climb that has seen it rise nearly a full percentage point since the start of 2024.

Statistics Canada’s latest labour force survey showed the local economy shed 4,700 jobs last month. That pushed the regional unemployment rate up three-tenths of a percentage point from April and nine-tenths of a point since January, when it stood at 4.6 per cent.

Employment was up slightly in the tech sector last month, rising by about 300 jobs to a three-month rolling average of 60,200. The three-month average also rose in other industries such as construction, manufacturing, health care and educational services.

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But there were fewer civil servants as the three-month rolling average dropped to 204,300 employees in the public administration sector, down from 207,500 in April.

Meanwhile, employment also fell in sectors such as retail, accommodation and food services and information, culture and recreation.

Statistics Canada has been putting more emphasis on the employment rate in its reports recently to capture whether job gains are keeping up with population growth.

The local employment rate – which represents the proportion of residents aged 15 years and older who are employed – dropped to 64 per cent last month. That’s down from 64.6 per cent in April and 65.9 per cent in January.

The National Capital Region’s job market fared worse than the country’s as a whole in May. 

Nationally, Canada’s unemployment rate rose slightly to 6.2 per cent in May, up from 6.1 per cent the previous month, as opportunities became harder to find for prospective job-seekers.

Statistics Canada’s latest labour force survey showed the economy added 27,000 jobs last month – too modest of a gain to keep the unemployment rate from rising by a tenth of a percentage point.

The report, which came in largely as forecasters had expected, suggests the Canadian job market continues to soften as high interest rates weigh on consumers and businesses.

“The main numbers were returning to a familiar trend: the Canadian job numbers eking out a decent overall headline gain, but not matching population growth,” said Brendon Bernard, a senior economist with hiring site indeed.

“And that’s showing up in a rising unemployment rate, which, at 6.2 is not particularly low anymore.”

Economists were taken by surprise in April when employment jumped by 90,000 — the largest monthly increase since January 2023.

But the May employment data suggests the job market is back on trend.

“It didn’t take much digging to unearth the fact that this report is considerably softer than the headline, as all of the gains were in part-time jobs, in one province (Ontario), and the unemployment rate ticked up to 6.2 per cent, as expected,” wrote BMO chief economist Douglas Porter in a client note.

Of those who were unemployed in April, just under a quarter found work the next month, the report said. That’s below the pre-pandemic average of 31.5 per cent for the same months in 2017, 2018 and 2019.

“A lower proportion of unemployed people transitioning into employment may indicate that people are facing greater difficulties finding work in the current labour market,” the report said.

More Canadians are also finding themselves working part-time because they don’t have better options.

Statistics Canada says the involuntary part-time rate – which refers to the proportion of part-time workers who could not find full-time work or worked part-time because of weak business conditions – was 18.2 per cent in May. That’s up from 15.4 per cent a year prior.

Young people have also felt the consequences of the job market slowdown. The report notes that for returning students aged 20 to 24, their employment rate was down 2.9 per cent from a year ago.

“Over the past year, we’ve seen that youth employment conditions have really taken a hit,” said Bernard.

Youth have been particularly affected by weaker hiring trends because they tend to go in and out of the labour market, he explained.

Bernard said strong population growth among people aged 25 and under is also contributing to weaker employment among youth.

Meanwhile, U.S. employers added a strong 272,000 jobs in May, accelerating from April and a sign that companies are still confident enough in the economy to keep hiring despite persistently high interest rates.

The data from both Canada and the U.S. come two days after the Bank of Canada opted to lower interest rates for the first time in four years, citing easing inflation and the weakening economy.

The central bank lowered its key interest rate by a quarter of a percentage point to 4.75 per cent and signalled that more rate cuts would be on the way, so long as inflation continues to slow.

“Taken together, this mixed bag doesn’t really move the needle on the Bank of Canada rate-o-meter. It’s still consistent with growing slack in the economy, albeit with sticky wages,” Porter wrote.

Wage growth remained strong in May as average hourly wages rose 5.1 per cent from a year ago, reaching $34.94.

Employment was up in health care and social assistance, finance, insurance, real estate, rental and leasing, business, building and other support services as well as accommodation and food services.

Meanwhile, employment fell in construction, transportation and warehousing and utilities.

– With additional reporting from the Canadian Press

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