Canada’s unemployment rate falls to record low

Canada’s jobs market showed signs of extreme tightening last month, with the unemployment rate falling to a record low, wage gains accelerating and large numbers of Canadians dropping out of the labor force.

The economy shed 43,200 jobs in June, Statistics Canada reported Friday in Ottawa, a surprise negative reading compared to the 22,500 gain anticipated by economists. But the drop appears to reflect the voluntary exit of workers from the labor force, which dropped by nearly 100,000 in June — the biggest one-month decline on record outside of the pandemic.

The drop in the number of workers pushed down the jobless rate to 4.9%, a low in data going back to 1976.

Reflecting the dearth of workers, the average hourly wage rate shot up 5.2% from a year ago, an acceleration from 3.9% in May.

The numbers illustrate the extent to which the nation’s labor market has run up against maximum employment, and will struggle to grow further without continuing to fuel wage gains. The imbalance between demand and supply of jobs is a primary reason why the Bank of Canada is tightening monetary policy so aggressively.

More highlights:

• Wage growth for permanent workers — a key gauge for the Bank of Canada — rose to 5.6% in June, from 4.5% in May
• The decline was all self-employed workers, with their numbers falling by 59,200. Losses were concentrated in the retail and wholesale sectors
• Part-time employment levels fell by 39,100, while the number of full-time jobs were down by 4,000
• The decline in both employment and labor force were led by youth, and older workers
• Participation rate fell to 64.9% in June, from 65.3% previous. Hours worked rose 1.3% last month, the first gain since March