Ottawa-Gatineau’s unemployment rate continued to rise last month as the workforce kept growing faster than the number of new jobs created.
Statistics Canada said Friday the region’s jobless rate ticked up to 4.5 per cent in July from 4.3 per cent the previous month.
While the agency reported that the local economy added 4,700 jobs last month, the region’s overall labour force – including unemployed people actively seeking jobs – rose by 6,900 as the population grew.
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It marked the second month in a row the unemployment rate has risen, suggesting the labour market is softening as rising interest rates weigh on the economy.
Among the big gainers last month were the construction and public administration sectors. The all-important technology sector held relatively steady after a rocky stretch earlier this year, gaining about 200 jobs in July.
Nationally, meanwhile, the unemployment rate ticked up to 5.5 per cent last month. Statistics Canada said employment was little changed in July, falling by 6,400 jobs.
As Canada’s population continues to grow rapidly, rising unemployment signals the economy isn’t creating enough jobs to absorb a larger workforce.
July marks the third consecutive month that the unemployment rate has risen.
Prior to that, it was hovering at five per cent for nine consecutive months, just above the record-low of 4.9 per cent reached last summer.
As Canada’s population continues to grow rapidly, rising unemployment signals the economy isn’t creating enough jobs to absorb a larger workforce.
“We’ve seen a consistent increase in the number of people without a job in Canada, but people that are still in the labour force,” said James Orlando, TD’s director of economics.
Job vacancies have also declined in the country, offering another sign that the labour market is loosening.
Orlando says high population growth is helping the economy stay afloat as newcomers add to demand. So instead of high interest rates leading to outright job losses, Orlando says the unemployment rate is rising.
“When people come to Canada, even if they don’t get a job right away, they’re consumers, right? They’re looking for housing, they need to buy food, they need to buy clothes. And so they’re buying stuff within the economy. And that is a demand shock,” Orlando said.
“It’s putting a floor under the economy at a time when most people would have thought it would be contracting.”
The federal agency says job losses last month were led by the construction industry, while the greatest job gains were made in health care and social assistance.
High interest rates are expected to push unemployment even higher as borrowing costs rise for both businesses and consumers.
The Bank of Canada has raised its key interest rate to five per cent, the highest it’s been since 2001.
The central bank is hoping its aggressive rate hikes slow the economy down enough to bring inflation to its two per cent target.
It has cited concern about the pace of wage growth as well, which rebounded in July, rising five per cent year over year.
Inflation in June fell to 2.8 per cent, within the Bank of Canada’s target range of one to three per cent. But core measures of inflation which strip out volatility show prices are still rising quickly and new forecasts from the central bank suggest it expects inflation to get back to two per cent by mid-2025.
– With additional reporting from the Canadian Press
