Ottawa’s unemployment rate remains low, public service is falling

Statistics Canada said there were 51,000 fewer public sector workers in July, the sector’s first decline in a year

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The unemployment rate in Ottawa fell to 3.5 percent in July, one of the lowest in the country, despite a decline in civil servants.

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In its latest labor force survey, Statistics Canada said there were 51,000 fewer employees in the public sector in July, the first drop in that sector in a year. The decline was largely concentrated in Ontario and Quebec. On an annual basis, employment in the public sector increased by 5.3 percent.

The unemployment rate in Canada remained at an all-time low of 4.9 percent, unchanged from June, as the country continues to struggle with a labor shortage.

The economy lost 31,000 jobs, marking the second consecutive month of job losses.

The number of self-employed workers rose by 34,000 last month. There was little change in the number of employees in the private sector.

The Canadian job market remains exceptionally tight, with more than a million job openings across the country. The unemployment rate is the lowest on record, with comparable data going back to 1976.

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Statistics Canada says that despite the labor shortage, there is no evidence of an increase in the number of people leaving or changing jobs.

CIBC senior economist Andrew Grantham noted that July’s job losses were concentrated in the services sector, including wholesale and retail, education and health care in a note on Friday morning.

“As some of those sectors report high vacancy rates, supply of labor rather than demand appears to be the main problem,” Grantham said.

The employment rate of Canadians between the ages of 25 and 54 is relatively unchanged from pre-pandemic.

The pace of wage growth also remained stable compared to June, with an average hourly wage increase of 5.2 percent year-on-year.

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The Statistics Canada report also looked at the ongoing shortage of health workers, with a focus on nurses. More than one in five nurses worked overtime in July, according to Statistics Canada, the highest level since comparable data became available in 1997.

By comparison, in July, about 10 percent of all other employees worked overtime.

As Canada faced the seventh wave of COVID-19 infections, 11.2 percent of nurses were sick for at least part of the week when the Labor Force Survey was conducted.

The Bank of Canada is closely monitoring employment opportunities in the country as it gears up to make its next key interest rate announcement in September, when it is expected to raise interest rates again.

As economic growth in the country slows as the central bank tries to tame inflation with higher interest rates, economists have noted that the tight labor market makes the slowdown unique in nature.

With files from the Canadian Press

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