Canada’s economy experienced a setback in February with the loss of 84,000 jobs, causing the unemployment rate to rise to 6.7 percent, according to Statistics Canada. This decline in employment was primarily driven by decreases in full-time and private sector positions, reversing a brief period of growth seen earlier in the fall.
Significant job losses were observed in various industries, including 18,000 in wholesale and retail trade, 12,000 in construction, and 9,200 in manufacturing. Men aged 25 to 54 and young individuals aged 15 to 24 were particularly affected by this downturn.
Despite some stability in certain indicators compared to the previous year, such as the unemployment rate and the number of full-time and part-time workers, the participation rate dropped slightly to 64.9 percent in February. Average hourly wages increased by 3.9 percent to $37.56 per hour.
Katherine Judge, executive director and senior economist at CIBC Capital Markets, expressed concerns about the labor market’s negative turn, emphasizing the loss of full-time, private sector roles. This unexpected drop in jobs and rise in unemployment contradicted analyst predictions, leading to heightened uncertainty in the current economic climate.
Economist Douglas Porter from the Bank of Montreal described the latest job report as “exceptionally weak,” highlighting the lack of job growth over the past year. He cautioned against premature talks of interest rate hikes, suggesting that the Bank of Canada should consider potential rate cuts if economic weakness persists.
The youth unemployment rate, especially for individuals aged 15 to 24, increased to 14.1 percent, reflecting ongoing challenges faced by this demographic. Racialized youth experienced disproportionately higher unemployment rates compared to their non-racialized, non-Indigenous counterparts, according to Statistics Canada data.
In light of these concerning trends, many experts are now questioning the possibility of interest rate hikes and foresee a more cautious approach from the central bank in the face of economic uncertainties.