Canada’s Unemployment Rate Reaches Eight-Year High Amid Increased Labor Force
In November, Canada’s unemployment rate experienced a significant rise of 0.3 percentage points, reaching 6.8 percent—the highest level in eight years. This increase follows a resurgence in the number of individuals seeking employment, according to the latest report from Statistics Canada released on Friday. Excluding the years 2020 and 2021, which were heavily impacted by lockdowns aimed at curbing the spread of COVID-19, this figure marks the highest unemployment rate since January 2017.
Despite this uptick, the report noted that employment rose by 51,000 in November, primarily driven by full-time positions and predominantly in the public sector. Analysts suggest that the noticeable increase in the unemployment rate can largely be attributed to a substantial growth in the labor force rather than actual job losses.
“In light of the mixed signals from this month’s employment report, we still see the labor market adding jobs, confirming our belief in its underlying strength,” stated James Orlando, an analyst with TD Economics, in a research note. He, along with other economists, continue to predict that the Bank of Canada will cut its key lending rate by a minimum of 25 basis points during their next meeting, following a larger reduction that took place in October.
For nearly a year, Canada had maintained its benchmark interest rate at 5.0 percent—the highest in two decades—before starting to lower rates in early June. Canada was the first among the Group of Seven advanced economies to begin reducing rates after a prolonged period of inflation largely influenced by the pandemic.
The recent cut brought the benchmark rate down to 3.75 percent. According to Statistics Canada, increases in November were seen in sectors such as wholesale and retail trade, construction, professional, scientific and technical services, educational services, and accommodation and food services. Conversely, there were declines noted in manufacturing, transportation and warehousing, as well as natural resources.
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