Canada’s economy was dealt another blow last month, and it wasn’t due to tariffs. Statistics Canada (Stat Can) data shows the unemployment rate climbed aggressively in May, hitting a new multi-year high. Despite the narrative of tariff-induced job losses, the country managed to add a few thousand jobs. Rising unemployment continues to be driven by an aggressive immigration strategy, which added four workers for every job last month.
Canadian Unemployment Rate Hits 7%, Highest Since 2021
Canada’s unemployment rate climbed 0.1% to 7.0% in May, up 0.7 points from last year. This marked the 6th consecutive increase and the highest rate since 2021. The economy is not alright—especially considering the sheer volume of the unemployed population.
Canadian Unemployed Population Nears 1.6 Million
Canadian unemployment in thousands of people.
Source: Statistics Canada; Better Dwelling.
The agency estimates the unemployed population grew 1.7% (+26.5k people) to 1.6 million in May. It represents an increase of 13.8% (+190k people) from last year, outpacing the brisk growth of the general population—driven by an immigration strategy that remains aggressive despite minor tapering. Canada hasn’t had this volume of unemployed people outside of its most serious economic recessions.
Canada Didn’t Lose Jobs Last Month, It Gained A Few Thousand
Meanwhile, Canadian employment was virtually unchanged (+8k jobs) at 20.98 million workers in May. To be blunt, this means the country added 1 job for every 4 workers in the month—a dangerously imbalanced ratio. In recent months, unemployment had been rising briskly but the country was just adding workers faster than it could create jobs. Job growth has since flatlined and the population continues to outpace it, despite a mild attempt at throttling immigration.
Canada’s Attempt To Use Immigration For Cheap Growth Is Backfiring
Canada is attempting to use immigration to boost its economy the way cheap credit is often used. By fueling excess demand, increased consumption creates economic activity and employment. However, just like cheap credit, it becomes counterproductive and inflationary for consumption. The economic stimulus is then turned into a drag on the economy, throttling growth and lowering its long-term prospects of success.
There’s a reason Canada’s aggressive strategy hasn’t been adopted elsewhere. Other successful countries can also just issue visas to grow its population by 2% per year, but they understand it’s a questionable proposition—both to the existing population and the immigrants who move only to realize the booming economy was largely a facade. Healthy economic growth is based on a healthy balance of immigration and natural family formation—not just an attempt to rapidly expand the workforce.
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