Unemployment Rates Fall in Canada and U.S

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July’s labour market figures in Canada show a healthy situation with unemployment rate falling to 6.3%, a decrease of 0.2%, according to Statistics Canada. The last 12-months saw employment rise by 388,000 where the majority – 354,000 jobs – was in full-time work. The employment growth was driven by wholesale and retail trade, information, and manufacturing. Employment in wholesale and retail trade lead the growth with an increase of 22,000, trending upward since late 2016. Information and culture and recreation sectors have been mostly consistent with little change in growth, month to month. Wages are still rising at a low level and this remains a concern for both Canada and the U.S. Canada’s job market also faces a lowering labour force participation rate, falling from 65.9 to 65.7%, affected by factors we will go over later in the article.

In regards to our neighbors down south, the U.S unemployment rate fell to 4.3% from 4.4%, reaching its 16-year low. A 209,000 increase in July non-farm payrolls beat the expectations of The Wall Street Journal surveyed economists who expected 180,000 new jobs. This job growth was driven by food services, professional and business services, and health care industries. A standout of the statistics is the significant growth seen in traditionally lower wage industries such as home health-care and food services. Furthermore, leisure and hospitality saw a wage gain of 3.8% which outpaces the average. These trends paint a brighter picture for low-wage jobs as there appears to still be some slack in the job market even with tightening monetary policies. However, like in Canada, wage growth continues to be modest in most industries where hourly earnings increased 2.5% for the fourth consecutive month.  It is important to note that once wages are adjusted for inflation, the growth rate is outperforming the 30 year average.

An indicator that is likely to continue to raise concerns in both Canada and the U.S is the labour force participation rate. The U.S participation rate sits at 62.9% in July with very little movement over the past year.  This indicator shows the number of people who are employed or are actively looking for a job. A number of factors contribute to the high number of Canadians and Americans who are outside the labour force. Discouraged workers, people who believe no jobs are available to them, remains fairly unchanged over the year at 536,000 in the U.S. A study conducted by Obama’s Council of Economic Advisers back in 2015 found that structural factors included aging population and prime-age participation rates of males and females declining. Aging trends accounted for over 50% of the overall LFP trend.

With that being said, the labour markets remain a bright spot for both Canada and the US. The July labour market releases tell a similar story to ones we have seen all year, where a fairly health labour market is seeing strong job growth while contrasted by weak wages that will hopefully pickup in the near future.


  1. http://www.statcan.gc.ca/daily-quotidien/170804/dq170804a-eng.htm
  2. https://www.bls.gov/news.release/pdf/empsit.pdf
  3. https://www.wsj.com/articles/u-s-hiring-maintains-strong-pace-jobless-rate-falls-to-4-3-1501849959
  4. https://www.bloomberg.com/news/articles/2017-08-04/americans-on-lower-rungs-get-relief-as-labor-market-strengthens
  5. https://obamawhitehouse.archives.gov/sites/default/files/docs/20150806_labor_force_participation_retirement_research_consortium.pdf

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