Employment little changed in March but unemployment rate rises: Statistics Canada

April 5, 2024 Mario Toneguzzi BusinessNews

Employment was little changed in March (-2,200; -0.0%) and the employment rate fell 0.1 percentage points to 61.4%, reported Statistics Canada on Friday.

The federal agency said the unemployment rate rose 0.3 percentage points to 6.1% in March. On a year-over-year basis, the unemployment rate was up by 1.0 percentage points.

Edmond Dantès

“In March, employment declined among youth aged 15 to 24 (-28,000; -1.0%), while it rose among core-aged men (aged 25 to 54) (+20,000; +0.3%). Employment was little changed among core-aged women, as well as among women and men aged 55 and older,” it said.

“There were fewer people employed in accommodation and food services (-27,000; -2.4%), wholesale and retail trade (-23,000; -0.8%) and professional, scientific and technical services (-20,000; -1.0%) in March. Employment increased in four industries, led by health care and social assistance (+40,000; +1.5%).

“Employment decreased in Quebec (-18,000; -0.4%), Saskatchewan (-6,000; -1.0%) and Manitoba (-4,300; -0.6%) in March, while it increased in Ontario (+26,000; +0.3%).

“Total hours worked in March were virtually unchanged in the month but were up 0.7% compared with 12 months earlier. Average hourly wages among employees rose 5.1% (+$1.69 to $34.81) on a year-over-year basis in March, following growth of 5.0% in February (not seasonally adjusted).”

StatsCan said the employment rate—the proportion of the population aged 15 and older who are employed—declined by 0.1 percentage points to 61.4% in March, the sixth consecutive monthly decrease.

“From March 2023 to March 2024, the employment rate has decreased by 0.9 percentage points, as employment growth (+324,000; +1.6%) has been outpaced by growth in the population aged 15 and older in the Labour Force Survey (LFS) (+1.0 million; +3.2%). On March 27, 2024, Statistics Canada reported that Canada’s population had increased at an annual rate of 3.2% as of January 1, 2024, the fastest annual growth rate since 1957,” it said.

“Private sector employment was little changed for a fourth consecutive month in March and has held steady for eight of the nine months since June 2023. Public sector employment was also little changed in March 2024. From March 2023 to March 2024, employment has grown at a faster rate in the public sector (+4.8%; +202,000) than in the private sector (+1.1%; +141,000).

“Self-employment fell by 29,000 (-1.1%) in March, partly offsetting an increase of 38,000 (+1.5%) in February. On a year-over-year basis, self-employment was little changed in March.”

It said the unemployment rate rose 0.3 percentage points to 6.1% in March, bringing the cumulative increase over the past 12 months to 1.0 percentage points.

The monthly increase in the unemployment rate in March was driven by an increase of 60,000 (+4.8%) people searching for work or on temporary layoff. This brought the total number of unemployed people to 1.3 million, an increase of 247,000 (+23.0%) compared with 12 months earlier, added the federal agency.

“The majority (64.9%) of people who were unemployed in February 2024 remained unemployed in March 2024. This was higher than the corresponding proportion for February and March 2023 (60.5%), indicating that unemployed persons may have faced greater difficulties finding work compared with a year earlier,” it said.

“The labour force participation rate—the proportion of the population aged 15 and older who were employed or looking for work—stood at 65.3% for the third consecutive month in March 2024. On a year-over-year basis, the participation rate was down by 0.4 percentage points, largely reflecting year-over-year declines in the participation rates of youth aged 15 to 24 (-2.6 percentage points to 63.0%) and people aged 55 and older (-0.4 percentage points to 36.5%). Among youth, the participation rate fell at a faster rate among students (-2.7 percentage points to 45.0%) than non-students (-0.9 percentage points to 86.6%) over the period (not seasonally adjusted).”

Andrew Grantham, Senior Economist, CIBC Capital Markets, said the cracks that had been emerging within the Canadian labour market suddenly got a lot wider.
“Employment edged down by 2K in March, against consensus expectations for a 25K increase. While that admittedly isn’t a large decline given the volatility of monthly labour market data, it came in contrast to a further sharp rise in the population. As a result, the unemployment rate spiked to 6.1%, from 5.8% and against expectations for a more modest increase to 5.9%, with labour force participation unchanged. Over the past 12 months the unemployment rate has now risen by 1%. Accommodation & food services and retail & wholesale led the employment declines by industry, suggesting sluggishness in consumer spending is impacting hiring plans. Offsetting those declines, health care saw the largest increase on the month. While markets had been pushing back expectations for a first Bank of Canada interest rate cut following strong GDP data to start the year, today’s labour force data should see them pulling those expectations forward again closer in line to our expectation for a first move in June,” he said.
James Orlando, Senior Economist, TD Economics, said the Canadian labour market lost steam in March, with the unemployment rate rising significantly.
“This continues the trend over the last year, where Canadian firms have been unable to absorb strong population-driven labour force growth. While this has brought the labour market into balance, it also means that more Canadian workers are unemployed (280k more since the beginning of 2023). To make matters worse, hours worked fell for the first time in four months. This throws some cold water on expectations that the recent string of hot economic data prints to start 2024 will be sustained,” he said.”Today’s report casts a cloud over the Canadian economy, but it is unlikely to change the Bank of Canada’s (BoC’s) thinking when it meets next week. As mentioned above, recent data outside of this weak employment report has been quite strong. This validated the Bank’s decision to remain patient with the start of rate cuts. While it has afforded the central bank some extra time to wait to ensure inflation remains on its downward trajectory 2%, markets are increasingly betting that the BoC will pull the trigger on its first rate cut in June.”
Nathan Janzen, Assistant Chief Economist, Royal Bank of Canada, said the rise in the Canadian unemployment rate and pullback in hours worked in March are reasons to take substantially firmer looking GDP growth numbers in early 2024 with a large grain of salt.
“The number of job openings has continued to decline as labour demand softens and the unemployment rate increase has been larger than in other advanced economies in the wake of higher interest rates. Labour markets still haven’t collapsed in a way that would force the Bank of Canada to react quickly or aggressively with lower interest rates, but a rising unemployment rate and further signs that inflation pressures are broadly consistent with our base-case assumption that the central bank will shift to cuts by mid-year,” he said.
Douglas Porter, Chief Economist, BMO Economics, said: “To some extent, it almost feels like Canada was due for a sour jobs release, given the softness in underlying growth over the past year. Still, it’s a bit of a surprise in light of the solid start to 2024 on the growth front. Probably the two most important stats from this report are: 1) the 1 point rise in the unemployment rate over the past year to 6.1%, and 2) the stickiness of wages at 5.1% in the face of that softness. That combination leaves the Bank of Canada in a tricky spot, with the job market clearly softening, yet still spinning off strong income gains. On balance, the BoC will likely view the overall results as pointing to more disinflationary pressure ahead, and will await the next couple of inflation prints, but a June cut is looking a bit more likely now. So, even with an upgrade to GDP, the door is open wide for the Bank to sound more dovish at next week’s policy meeting.”

Mario Toneguzzi

Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.

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