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Canada鈥檚 unemployment rate held steady at 4.9% in July, matching the record low from the month before.

The total number of unemployed people held steady at one million in July. In addition, 426,000 people wanted a job but did not look for one, and therefore did not meet the definition of unemployed. This was little changed for the sixth consecutive month. The adjusted unemployment rat别鈥攚hich accounts for this source of potential labour suppl测鈥拦emained at 6.8%, the lowest rate since comparable data first became available in 1997.

In addition, employment in Canada decreased by 31,000 jobs, which according to does not represent a significant change. Canada lost about 74,000 jobs from May to July, but from May 2021 to May 2022, employment had increased by more than one million.

That being said, July marks the second consecutive month of decreased employment in Canada. Plus, the record-low unemployment coupled with more than one million job vacancies means Canada is still facing a tight labour market.

鈥淭wo consecutive months of lower employment indicates that the Canadian labour market is running up against capacity constraints, with little room for upside movement,鈥� writes RBC economist Carrie Freestone in an . 鈥淒emand for workers is still very high with job postings still 65% above pre-pandemic levels (though the number of job postings continues to fall), and there are few unemployed Canadians available to fill these vacant positions.鈥�

Employment among public sector employees fell by 51,000 (1.2%) in July, the first decline in the sector in 12 months. The decrease was largely concentrated in Ontario and Quebec. Despite the month-over-month decline, public sector employment was up 5.3% (+215,000) compared to July 2021.

The number of self-employed workers increased by 34,000 (+1.3%) in July after falling by聽59,000聽(-2.2%) in June. Despite this increase, self-employment remained flat on a year-over-year basis and was聽214,000聽(-7.4%) below its pre-pandemic February聽2020聽level.

Employment fell by聽53,000聽(-0.3%) in the services-producing sector in July. Wholesale and retail trade contributed the most to losses in this sector. The number of people working in wholesale and retail trade fell by聽27,000聽(-0.9%) in July, the second consecutive monthly decline. The majority of the net decrease took place in Ontario and Quebec.

鈥淛ob losses were strangely concentrated in the services sector, including wholesale and retail, education and health,鈥� Andrew Grantham, CIBC told . 鈥淲ith some of those sectors reporting high vacancy rates; labour supply rather than demand appears to be the main issue. That said, the major difference between today鈥檚 report and last month鈥檚 is that wage growth unexpectedly decelerated.鈥�

Average hourly wages for employees rose 5.2% (+$1.55 to $31.14) on a year-over-year basis in July, roughly the same year-over-year rate of increase seen in June (+5.2%; +$1.54). For a second consecutive month, average hourly wages grew at a similar pace among part-time (+5.0%; +$1.05) and full-time (+4.9%; +$1.52) employees. Earlier in 2022, wage growth had been faster among full-time employees compared to part-time workers.

The most recent inflation data indicated that the聽聽rose聽8.1% on a year-over-year basis in June, the largest annual change in nearly聽40聽years.

鈥淭he rising cost of living is raising the temperature at the collective bargaining table,鈥� wrote economist Liam Daly in a Conference Board of Canada . 鈥淕iven the rate of inflation, unions argue that typical annual pay rises are simply insufficient. Amid high vacancy rates and a low unemployment rate, workers are negotiating from a strengthened position.鈥�

Doug Porter, BMO economist, said in a statement to the main takeaway is that the job market is still very tight.

鈥淲e鈥檙e still dealing with the lowest unemployment rate in at least 50 years, and wages that are running strong,鈥� Porter said. 鈥淏ut from a growth angle the reality is employers are having trouble finding employees, and, so that caps the growth of the economy.鈥�

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