July’s data, which followed a surprise gain of 59,900 jobs in June and 17,300 losses in May, shows an economy starting to gear down under the accumulated weight of 475 basis points of rate hikes. While firm economic data earlier this year prompted Macklem and his officials to raise rates in June and July after a five-month pause, recent indicators point to fading momentum.
So far this year, monthly employment growth has averaged 22,000 jobs.Employment growth in the past year has occurred during a period of historically high population increases. From January to July, the employment rate fell 0.5 percentage points, as population growth of 1.4% outpaced an 0.7% gain in employment over this period. With the jobless rate in Canada rising steadily since May, the three-month moving average now stands at 5.37%, up from the 12-month low of 5%. According to a recession indicator created by US economist Claudia Sahm, once that rate rises half a percentage point or more, the economy is contracting. By that measure, if the unemployment rate holds or rises further over the next few months, it could signal Canada is entering a period of downturn.
The participation rate decreased 0.1 percentage point to 65.6%. The employment rate, or the employed proportion of the population aged 15 and older, was 62%, down 0.2 percentage points from a month earlier and little changed on a year-over-year basis.
Job losses were led by decreases in construction, public administration, information and recreation and transportation and warehousing.
Regionally, employment rose in Alberta, New Brunswick and Prince Edward Island, while it decreased in Manitoba and Saskatchewan and was little changed in the other provinces.