Region’s unemployment rate holds steady at 4.2% in May as labour force grows

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Ottawa-Gatineau employers created 7,500 new jobs last month, bucking a trend that saw a slight dip in employment across the country – but the region’s unemployment rate held firm as thousands of workers re-entered the labour force.

The National Capital Region’s jobless rate was 4.2 per cent in May, Statistics Canada reported Friday, the same as it was the previous month. 

The rate held steady because even as overall employment ticked up, so did the number of residents looking for jobs. 

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The number of employed residents in Ottawa-Gatineau totalled 819,600 in May, up from 812,100 in April. The size of the labour force, which includes people actively seeking employment, also grew by 7,500 people in May, rising from 848,200 in April to 855,700 last month.

Meanwhile, the participation rate – a key indicator that compares the size of the region’s labour force to the region’s population of working-age residents – rose to 67.9 per cent last month, up from 67.4 per cent in April.

The region’s largest employer continued to churn out jobs in May. StatCan’s figures, which report a three-month rolling average, showed the public administration sector grew by about 3,300 positions to 192,800 workers. 

The tech sector, another key driver of the local economy, grew about two per cent as it gained 1,100 jobs. It marked a slight rebound after the sector shrank by 10 per cent in April amid an ongoing wave of layoffs that have rocked tech companies from coast to coast.

Other sectors making gains in May included construction, health care and educational services. 

Conversely, the retail industry continued its recent slide, shedding another 1,400 jobs last month after losing 3,000 in April.

Nationally, Canada’s jobless rate ticked higher to 5.2 per cent in May, marking the first increase since August 2022 as economists have been watching for any sign of a softening labour market.

Overall employment was little changed last month as the economy lost a modest 17,000 jobs, Statistics Canada said.

“Today’s negative print ends a streak of eight months of job gains,” said TD director of economics, James Orlando, in a client note.

“The question is now: Is this a one-off or the start of a trend? The labour market had been defying gravity for months and was bound for some giveback.”

The job report comes two days after the Bank of Canada raised its key interest rate by a quarter of a percentage point, bringing it to 4.75 per cent, the highest it’s been since 2001.

The decision was prompted by a string of hot economic data, including a surprisingly resilient labour market. The central bank said the resilience of the Canadian economy suggests getting inflation back to two per cent may be harder than it had previously expected.

Canada’s unemployment rate was previously hovering at five per cent for five consecutive months, just above the all-time low of 4.9 per cent reached last summer.

However, the federal agency noted in the report that job growth has moderated in recent months. It says monthly job gains between February and April averaged at 33,000. That follows the economy adding more than 300,000 jobs cumulatively between September and January.

According to Friday’s report, fewer people were working in business, building and other support services as well as professional, scientific and technical services last month.

Meanwhile, employment rose in manufacturing, other services and utilities.

Employment among youth was also down, suggesting a slow start to the summer hiring season.

The central bank has been particularly concerned about how fast wages are growing, arguing that wage growth in the four to five per cent range is incompatible with a two per cent inflation target.

The federal agency says wages were 5.1 per cent higher in May compared with a year ago.

– With additional reporting from the Canadian Press

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