Ottawa-Gatineau’s jobless rate ticks up to 4.1% in September as labour force grows

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Ottawa-Gatineau’s rosy employment picture lost a bit of its gloss in September as the region’s jobless rate rose above four per cent for the first time since May.

The unemployment rate ticked up to 4.1 per cent last month, Statistics Canada said Friday, an increase from its 20-year-plus low of 3.4 per cent in August. 

Ottawa-Gatineau is still outperforming most major urban centres in what remains a tight labour market across the country, with Toronto (six per cent), Calgary (5.2), Montreal (4.9), Edmonton (4.8) and Vancouver (4.5) all posting higher jobless rates than the National Capital Region last month.

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While the local economy continued to churn out more new jobs last month – 5,300 more people were employed than in August – those gains were offset by an increase in the number of people looking for work as the labour force grew by 11,400 to 830,700.

Correspondingly, the participation rate – which compares the size of the region’s labour force to the region’s population of working-age residents – rose slightly in September to 67 per cent, up from 66.2 per cent the previous month.

A sector-by-sector look at the three-month rolling employment average shows that two of Ottawa-Gatineau’s key economic drivers – government and tech – shed jobs in September.

The public administration sector lost a net 1,800 positions last month, while the information, communications and technology sector was down a net 2,200 jobs. 

National rate falls

Meanwhile, a couple of the region’s other major sectors posted gains, including retail (up a net 1,900 jobs) and health care (a gain of 500). On the flip side, the information, culture and recreation sector lost a net 2,900 jobs, while employers in professional, scientific and technical services shed a net 2,400 jobs and the educational services sector lost 1,500 positions.

On the national front, the Canadian economy posted a modest gain in employment in September, reversing some of the losses seen in previous months and suggesting the labour market remains exceptionally tight.

The unemployment rate for the month fell to 5.2 per cent as fewer people looked for work, down from 5.4 per cent in August, Statistics Canada reported.

Meanwhile,the economy added 21,000 jobs.

The bump in employment was expected as job losses in the education sector during the summer were reversed with the reopening of schools.

The report said gains in education, health care and social assistance were offset by losses in several other sectors, including manufacturing and information, culture and recreation.

Canada’s labour force participation rate – the percentage of people who want and are looking for a job – edged down slightly by 0.1 per cent in September.

The rise in employment comes after three consecutive months of job losses in the Canadian economy.

The latest jobs numbers reinforce that the labour market is still very tight, said TD director of economics James Orlando.

“We still have lots of job vacancies out there – we still have a supply-demand imbalance for labour in Canada,” Orlando said.

To help businesses cope with existing labour shortages and fill vacancies, Immigration Minister Sean Fraser announced on Friday that Canada will temporarily allow international students to work more than 20 hours a week.

In July, employers were recruiting for nearly one million jobs.

As the Bank of Canada raises interest rates aggressively to tame high inflation, the Canadian economy is expected to feel the effects of higher interest rates both in its economic growth and employment numbers.

The central bank has suggested tight labour markets are partly to blame for high inflation.

“We’re a long way from that being fixed,” Orlando said.

Since March, the Bank of Canada has raised its key interest rate from 0.25 to 3.25 per cent, one of the fastest rate hike cycles in its history. With inflation still running well above its two per cent target, the central bank is expected to deliver another rate increase on Oct. 26.

As more sectors of the economy begin to feel the cooling effects of higher interest rates, TD is forecasting unemployment will rise to 5.6 per cent this year and will later peak at 6.5 per cent.

Friday’s report also showed that wages are continuing to grow, though at a slower pace than the cost of living. In September, wages were up by 5.2 per cent compared with a year ago, with the average hourly wage at $31.67.

Gains ‘a long time coming’

It marked the fourth straight month of five per cent or higher wage growth.

In August, the annual inflation rate was seven per cent.

Indeed senior economist Brendon Bernard said the recent gain in wages “has been a long time coming.”

“The stronger wage growth we’ve seen is in response to the surge in inflation and employers at least partially offsetting the rising cost of living through larger paycheques,” Bernard said.

The Bank of Canada is monitoring the pace of wage growth over risks of a wage-price spiral, where higher prices lead to higher wages and vice versa.

The report also looked at retirement among Canadians under the age of 65, one key factor in the apparent shortage of workers. Nearly one million Canadians between the ages of 55 and 64 said they were retired in September.

Over the last 20 years, the labour force participation rate has fallen steadily, largely due to an aging population.

The federal agency said since September 2019, the number of Canadians aged 65 and older grew by 11.6 per cent, while the working-age population grew by 3.5 per cent.

Bernard said economic cycles have largely been driving labour market tightness, but that the aging population trend “is constantly in the background.”

As children headed back to school in September, the report also examined the effect of child-care responsibilities on career decisions. Despite a record-high employment rate, women between the ages of 25 and 54 with children under the age of 16 were twice as likely to decide not to apply for a job or promotion over the last year than their male counterparts.

Women were also twice as likely as men to report helping their children with homework and home-schooling most or all of the time.

– With additional reporting from the Canadian Press

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