Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
Employment dropped 43k in July, much weaker than expected, partly offsetting the strong gain seen June. This is the biggest monthly job loss since the pandemic. Despite the decline in employment, the unemployment rate was unchanged at 6.9% due to a decline in the participation rate, as some discouraged job seekers left the labour force.
The details show that the decline in employment was primarily the result of lower youth employment (-33.7k), pushing the youth unemployment rate to 14.6%, its highest level since September 2010. However, we note that some seasonality factors could be at play. As such, we note that on a non-seasonally-adjusted basis, the gain in employment in July for the 16- 24-year-olds has been the weakest on record at +3.7% m-o-m, compared to +6.7% m-o-m on average since 2000, and explains the seasonally-adjusted job losses. However, less seasonal hiring will likely mean less seasonal job decline in September, meaning that we may have a stronger than usual gain in September on a seasonally-adjusted basis, reversing the weakness we had in July.
Wage growth for permanent workers accelerated to 3.5. Moreover, we estimate that the 3-month annualized change of the seasonally-adjusted series reached 7.3%, suggesting that wage growth was elevated in recent months.
What today’s data shows is that hiring is weak, with employment gains averaging 15k since the start of the year, and that the likelihood for the unemployed to find work is low. These are indications of a stalled labour market, rather than a recession. In our view, modest job gains are likely to remain the norm for the rest of the year, but the question is whether we will see further job losses in the coming months, due to continued economic pressures coming from the impact of US tariffs.
For the BoC, while the data shows that the amount of slack in the economy continues to grow, as long as core inflation remains above the target band, it will be difficult for the BoC to cut interest rates unless there are signs of significant deterioration in the economy. With this in mind, we believe the BoC will cut its policy rate another time this year, but the timing is dependent on easing inflationary pressures, with the cut more likely in October than
Alberta saw a drop of 16.8k job in July, partly reversing the gains seen in June. As a result, job gains since the beginning of the year have been meagre (+4.6k). As a result, the unemployment rate jumped to 7.8%, its highest since the pandemic. The weakness in the labour market since the beginning of the year is somewhat surprising, given Alberta’s exports and economy are much less impacted by the US tariffs than the rest of the country. This suggests that there could be other factors at play.
Wage growth in Alberta slowed to 3.2% y-o-y from 4.8% y-o-y and underperformed the rest of the country. However, the 3-month annualized change of the seasonally-adjusted series, at 16.1%, suggests a sharp rise in average wages in recent months. Wages in Alberta have generally underperformed relative to the rest of the country in recent years (see Why are Albertans so grumpy? It’s about falling behind economically for some explanations).
Employment decreased by 40.8k in July, the biggest decline since the pandemic. Despite the decline in employment, the unemployment rate was unchanged at 6.9% due to a decline in the participation rate, as some discouraged job seekers left the labour force. As such, the participation rate fell to 65.2% from 65.4%. The employment rate, the share of the population holding a job, edged lower to 60.7% from 60.9%. Both the participation rate and the employment rate are at their lowest levels since the late 1990s.
Wage growth for permanent workers accelerated to 3.5% y-o-y, after 3.2% in June However, the 3-month annualized change in seasonally-adjusted wages shows that wages grew 7.3% from 4.6%, suggesting stronger wage pressures in recent months.
The details show that the job losses were in full-time jobs (-51.0k), while there were some part-time job gains (+10.3k). The lower employment in July was mostly in the private sector (-39.0k), the self-employed (-5.8k), and higher in self-employed (+4.0k). Over the past year, almost a third of job creation was in the public sector. Hours worked decreased in July (-0.2% m-o-m), suggesting that economic activity declined this month.
On an industrial level, there were job loss in both the service sector (-11.9k) and the good-producing sector (-29.0k)
The details in the goods-producing sector (-29.0k) show that the job loss were mainly in construction (-21.6k), agriculture (-10.8k), natural resources (-1.4k), and utilities (-0.5k). They were partly offset by increases in manufacturing (+5.3k).
The decrease in the service industries (-11.9k) was led by information, culture and recreation (-29.2k), business, building and other support service (-19.2k), healthcare (-16.5k), and finance, insurance, real estate and leasing (-6.0k). These decreases were partly offset by increases in transport and warehousing (+26.1k), educational services (+22.4k), and other services (+6.6k).
At a provincial level, the decrease in employment was concentrated in Alberta (-16.8k, -0.6% m-o-m), BC (-16.3k, -0.5% m-o-m), Quebec (-15.0k, -0.3% m-o-m), and Ontario (-2.8k, +0.0% m-o-m). There were some job gains in five provinces, led by Saskatchewan (+3.5k, +0.6% m-o-m), Nova Scotia (+1.8k, +0.3% m-o-m), and Newfoundland (+1.1k, +0.4% m-o-m).
The unemployment rate remained constant at the national level but saw some slight increases in some provinces, led by Alberta (+1.0pp), Newfoundland (+0.6pp), BC (+0.3pp), Nova Scotia (+0.3pp), and PEI (+0.2pp). Quebec (-0.8pp) saw a decline in the unemployment rate.
The unemployment rate is the highest in Newfoundland (+10.5%), PEI (+8.8%), Ontario (+7.9%), Alberta (+7.8%) and New Brunswick (+7.5%). It is the lowest in Manitoba (+5.5%), and BC (+5.6%).
Wages for permanent workers increased nationwide. It increased most in Newfoundland (+6.4% y-o-y), Manitoba (+4.4% y-o-y), Nova Scotia (+4.3% y-o-y), and Ontario (+4.1% y-o-y). It rose at the slowest pace in Quebec (+2.7% y-o-y), and New Brunswick (+2.4% y-o-y).
Looking at CMAs, Employment grew the most over the past year in Red Deer (+13.1% y-o-y), Kamloops (+10.8% y-o-y), Drummondville (+10.4% y-o-y). However, the lowest-performing cities were Guelph (-6.7% y-o-y), Lethbridge (-6.6% y-o-y), and Windsor (-4.6% y-o-y).
The unemployment rate was the highest in Kamloops (+10.7%), Windsor (+10.2%), Oshawa (+9.7%). While the lowest rates are in Saguenay (+4.0%), Saskatoon (+4.5%), Quebec (+4.7%) and Kelowna (+4.7%).
In Alberta, employment decreased by 16.8k in July, partly reversing the gains seen in June. As a result, the unemployment rate jumped to 7.8% from 6.8%, while the participation rate also rose to 68.9% from 68.7%. The employment rate, the share of the population holding a job, declined to 63.5% from 64.0%. Wage growth for permanent workers decelerated to 3.2% y-o-y. The 3m/3m annualized wage growth jumped to 16.1%, suggesting a substantial increase in average wages for permanent workers in recent months.
The job losses in Alberta were mainly full-time (-38.4k), while part-time jobs increased (+21.6k). Employment was lower mainly in the private sector (-15.8k), while employment was little changed in the public sector (+0.5k) and self-employed (-1.6k).
The employment decline was mainly in the goods-producing sectors (-19.1k), while the service sector was little changed (+2.3k).
The decline in the goods-producing industry was mainly due to job losses in construction (-20.3k), natural resources (-5.1k), and agriculture (-4.2k). These were partly offset by gains in manufacturing (+10.8k).
The gains in the service sector were mainly in transportation and warehousing (+9.7k), professional, scientific and technical (+6.7k), and public administration. The declines were mainly in information, culture and recreation (-9.2k), health care (-8.1k) and trade (-2.9k).
On a regional basis[1], the data is published on a three-month average basis (see table below). Over the past three months, the province gained 2.3k jobs each month on average. There were increases in Edmonton (+4.6k) and Calgary (+2.9k) while there were job losses in all the other regions, led by Lethbridge-Medicine Hat (-4.9k), Western Alberta (-0.7k), and Camrose-Drumheller (-0.6k).
The unemployment rate for the province rose to 7.3% on average over the past three months. The unemployment rate increased in many regions, except in Lethbridge-Medicine Hat (-0.2pp), Camrose-Drumheller (-0.2pp), and Red Deer (-0.1pp). It increased the most in Western Alberta (+0.5pp), Edmonton (+0.4pp), and Wood Buffalo-Cold Lake (+0.3pp).
The unemployment rate is the highest in Edmonton (8.0%), Calgary (7.6%), Western Alberta (7.3%), and Wood Buffalo-Cold Lake (7.0%). It is the lowest in Red Deer (5.3%), Camrose-Drumheller (5.3%), and Lethbridge-Medicine Hat (6.3%).
The employment rate for Alberta rose to 63.7% over the past three months. The employment rate improved only in Edmonton (+0.3pp). It decreased the most in Lethbridge-Medicine Hat (-2.0pp), Western Alberta (-0.4pp), Camrose-Drumheller (-0.3pp) and Red Deer (-0.2pp).
Looking for more? Subscribe now to receive Economic updates right to your inbox here!
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 organization or person 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. 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 on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.