The unemployment rate hit its highest level since May 2017 last month in Canada, excluding the pandemic period of 2020 and 2021, when it stood at 6.6%, up 0.2 percentage points from July.
According to Statistics Canada, although the unemployment rate increased in all age groups compared to August 2023, the increase was more marked among young people.
Among students aged 15 to 24 who are gradually returning to school for the new academic year, the unemployment rate stood at 16.7% on average for the period from May to August, up from 12.9% in 2023.
The summer job market was even more difficult for Black, Chinese and South Asian students, who faced significantly higher unemployment rates. Black students in particular faced an unemployment rate of 29.5%, up 10.1% from summer 2023.
Overall, the Canadian economy added a modest 22,000 jobs, which is less than the pace of population growth.
In August, employment increased in education services, health care and social assistance, as well as in finance, insurance, real estate services, and rental and leasing services.
Meanwhile, it declined in “other services”, in professional, scientific and technical services, in public services and in natural resources.
The rise in the unemployment rate comes days after the Bank of Canada cut its key interest rate for a third straight time and suggested that more cuts were likely to come.
Central bank Governor Tiff Macklem has repeatedly said the bank wants to see a recovery in economic growth, acknowledging that the labor market has slowed significantly.
As job searches became more difficult, the number of unemployed rose to 1.5 million in August, a 22.9% increase from the same month last year.
Among those who were unemployed in July, 16.7% returned to work in August, a lower proportion than in August 2023.
Despite the sharp slowdown in hiring, workers have continued to benefit from rapid wage growth, meaning many have regained their pre-pandemic purchasing power.
Overall, average hourly wages in August rose 5% from a year ago to $35.16.
In Quebec, the unemployment rate remained at 5.7% for a third consecutive month. However, it increased both in Montreal, from 6.5% in July to 6.8% in August, and in Quebec City, from 3.8% in July to 4.0% in August.