When the number of job vacancies hit a record one million in 2022 and Canada’s employment market was at its tightest, workers held a strong upper hand with employers, even if trends like the Great Resignation never quite took hold here.
But now unemployment is on the rise, and the job market is rapidly shifting into low gear, which the Bank of Canada cited as a key reason for its interest rate cut on Wednesday following one just a month earlier. And one of the bank’s measures of labour conditions is flashing red.
The job-finding rate, which refers to the percentage of unemployed people from one month who found work the next month, has sunk to the level it was at during the Great Recession in 2009 and after the sharp economic slowdown in 2015 brought on by collapsing oil prices.
The bank’s latest monetary policy report, released in tandem with its decision to cut the policy interest rate to 4.5 per cent from 4.75 per cent, pointed to growing slack in the job market, particularly as young Canadians and newcomers struggle to find work. The situation prompted Bank of Canada Governor Tiff Macklem to declare, “we need growth to pick up so inflation does not fall too much” and marked a significant pivot after more than two years of repeatedly warning that growth “needs to moderate.”
Economists said the bank’s focus on employment points to more rate cuts ahead. “Further softness in the job market will now more directly show up as rising unemployment,” wrote Doug Porter, chief economist at Bank of Montreal in a note to clients. “Hence the talk about the need to boost growth, and the greater focus on downside risks.”
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