“Could have been worse” isn’t usually a ringing assessment of the job numbers, but in today’s economic climate, it’s enough for a temporary sigh of relief. Canadian employment edged up in May, with private sector jobs rising enough to offset an expected drop in the public sector as election-related hires wound down. Manufacturing employment slipped for a third straight month, but the drop was less than half of the size of April’s decline, while the natural resource sector held steady, suggesting a less severe bite from the trade war.
Still, the overall situation remains downbeat. Job growth has lagged population growth for almost all of the past two years, and the unemployment reached 7.0%, its highest level (outside the pandemic) since 2016. Conditions are particularly weak among youth, whose unemployment rate hit 14.2% overall and was 20.1% among returning students. The situation is probably even weaker than these numbers suggest, as they don’t capture the decline in job search activity among young Canadians who’ve dropped out of the labour force.
For all the uncertainty from the trade situation, at the national level, many of the downbeat labour market trends continue to resemble subdued trends that’ve built up in recent years. Layoffs remain relatively low, but new hiring is still subdued. So far, the bite from the trade war has been more apparent in specific regions that are highly integrated with US trade. A similar trend is evident in recruiting activity, as Canada-wide job postings on Indeed have held relatively steady since February, but are down more sharply in several trade-exposed regions including Saint John, Sault Ste. Marie, and Windsor. A rebound in these areas will depend on easing trade tensions, while the strength of the headline numbers will depend on if this weakness spreads more broadly.
