Canada's Jobs Market Stalls, and the Public Sector Leads the Retreat

Canada lost 68,000 jobs in September, according to the Labour Force Survey released Oct. 9, a second monthly decline in a row after a loss of 42,000 in August. The employment rate fell 0.2 percentage points to 60.6 percent. The unemployment rate rose to 6.5 percent, the same level it posted in January.

The two-month slide erased much of the spring rally. From April to July, employment had climbed by 181,000. Over the past year, the economy has added 95,000 jobs, a gain of half a percent.

September's losses were split almost evenly between full-time work, down 35,000, and part-time work, down 33,000. And they clustered where public budgets, not private demand, set the pace.

A public-sector story

The number of public sector employees fell by 70,000 in September, a fourth straight monthly decline. Over twelve months, public employment is down 119,000, or 2.6 percent, with most of the drop in educational services.

Private sector employment, by contrast, was little changed for a second month and stands 163,000 higher than a year ago, a gain of 1.2 percent. Self-employment dipped by 23,000 after rising through the spring.

Educational services shed 35,000 jobs in the month and 67,000 over the year, with the yearly losses concentrated in Quebec (27,000), Ontario (19,000) and Alberta (17,000). Healthcare and social assistance lost 23,000 positions, its first monthly decline since December 2022, though the sector is still up 93,000 from a year earlier and remains the largest single source of job growth over that period. Manufacturing gave back 13,000 jobs after adding 22,000 in August.

In short, the public sector belt-tightening visible in procurement for months is now showing up in the household survey.

Few layoffs, slow hiring

The most useful numbers in the release for a recruiter are the flows. The layoff rate, the share of people employed in August who were unemployed in September because of a layoff, was 0.7 percent. That is close to its year earlier level of 0.6 percent and the 2017 to 2019 average. Employers are not cutting deeply.

They are, however, hiring slowly. The job finding rate, the share of people unemployed in August who had a job by September, fell to 30.6 percent. A year ago it was 32.8 percent; before the pandemic it averaged 36.5 percent.

Put plainly, people who lose work are staying out of it longer. That deepens candidate benches in most categories and shifts negotiating leverage toward clients. It also raises the value of speed: when fewer than a third of unemployed workers find a job in a given month, the agency that presents vetted candidates first wins the requisition.