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Labour Market Data Support Bank of Canada Rate Decision

10 June 2024

Despite adding 27,000 jobs in May, the labour market continued to soften as the unemployment rate rose to 6.2%. Job growth came from part-time employment, which increased by 62,000, while full-time employment was down by 36,000. Most of the new jobs were in the service sector, including retail, accommodation, and food services. However, construction saw a decline of 30,000 jobs, which is concerning as we aim to spur on new housing development. The employment gains were concentrated in Ontario, with declines in both BC and Alberta, highlighting overall weakness in the numbers.

The unemployment rate will likely continue to rise in the coming months. Limits on temporary residents will moderate population growth and keep the unemployment rate from rising too high later in the year. We expect the unemployment rate to peak at 6.4%.

Wages were the only troubling part of the report. Average hourly earnings rose to 5.1% from 4.7% in April, which is back in line with the trend over the past year. While this might be a bit troubling for the Bank, they will likely take note of the growing slack in the job market. The continued rise in the unemployment rate and the increase in the involuntary part-time rate to 18.2% suggest that wage pressures will subside.

The story for the central bank is that while the economy is slowing, wages are still sticky. The focus for the Bank of Canada will be the two CPI inflation reports before the next policy meeting in July.

Housing Affordability Watch

CMI monitors the latest developments and offers insights on solutions to Canada’s housing affordability crisis

For nearly twenty-five years, there has been a significant shortage of new purpose-built rental construction. Instead, condos have become the primary source of new rental properties. This shift in construction activity is primarily due to differences in developers’ financing methods and the varying equity requirements for these types of projects.

In our latest Housing Affordability Watch instalment, we explore the obstacles to accelerating rental housing development, potential solutions, and the urgency of addressing these issues. 

Read it here: Making the Economics of Affordable Housing Pencil Out


Independent Opinion

The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any person or organization in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice including investment advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication. Readers are cautioned to always seek independent professional advice from a qualified professional before making any investment decisions.

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