Canada saw a surge in job creation, adding 39,900 jobs in August, nearly double what economists had anticipated. However, this increase falls short of keeping pace with the addition of approximately 103,000 new individuals to the population during the same period. Consequently, the employment rate, which measures the percentage of working-age adults with jobs relative to the total working-age population, dipped by 0.1 percentage points to 61.9 percent.
Economists had initially projected a more modest gain of around 20,000 jobs, with some even forecasting a decline, which would have marked the second consecutive month of job market contraction.
Throughout the year, Canada’s labor market has managed to create roughly 174,000 new positions, averaging about 25,000 new jobs each month. However, this growth pales in comparison to the threefold increase in the working-age adult population, with an average of 83,000 people aged 15 or older joining Canada’s population each month.
According to Doug Porter, an economist at the Bank of Montreal, the substantial influx of over 800,000 newcomers to Canada in the past year is the predominant factor influencing the job market’s dynamics.
Porter stated, “Canada now needs a continuous influx of jobs simply to keep up with the rapid population growth. Consequently, witnessing a robust monthly gain of 40,000 jobs while recognizing that the labor market is slightly loosening is not contradictory.”
Bank of Canada Governor Tiff Macklem addressed a business audience in Calgary and pointed out that, even in months when the economy registers job growth, it doesn’t outpace the growth of the population. This implies that the job market isn’t intensifying the inflationary pressures.
Macklem remarked, “This suggests that the supply of workers is increasing more rapidly than the demand for workers, resulting in a convergence of supply and demand and a moderation of these pressures.”