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For the first time in eight years, Canada’s unemployment rate reached 6.8 percent in November, up by 0.3 percentage points, Statistics Canada reported on Friday. The rise, attributed to an increase in job seekers, paints a complex picture of an evolving economy where more Canadians are actively searching for opportunities amidst shifting economic conditions.
Excluding the unusual disruptions caused by pandemic lockdowns in 2020 and 2021, Statistics Canada stated that November’s unemployment rate reached a level unseen since January 2017, offering a sobering reminder of economic challenges.
After a relatively stagnant October, the job market gained momentum in November with 51,000 new positions added, Statistics Canada reported. The surge was largely concentrated in full-time roles, with the public sector accounting for nearly all the growth.
Economists have sought to put the spike in the unemployment rate into perspective, highlighting that it was fueled by a large influx of individuals joining the labor force, rather than a substantial loss of jobs.
“Even with the messiness of today’s employment report, the economy continues to add jobs, reinforcing our view that the labor market is on solid foundations,” TD Economics analyst James Orlando said in a research note.
He, along with other analysts, suggested that the Bank of Canada is likely to announce at least a 25-basis-point reduction in its key lending rate next week, following a steeper adjustment in October.
Canada had held its benchmark rate steady for almost a year at 5.0 percent, the highest level in two decades, before initiating cuts in early June.
It was the first country among the Group of Seven advanced economies to begin trimming rates after a protracted period of inflation triggered largely by the pandemic.
Canada’s last cut dropped the rate to 3.75 percent. According to Statistics Canada, November employment rose in wholesale and retail trade; construction; professional, scientific and technical services; educational services, and accommodation and food services.
It declined in manufacturing, transportation and warehousing, and natural resources.
