No news is good news—at least when looking at the headline employment data. Statistics Canada (Stat Can) data shows that both the number of jobs and the unemployment rate were unchanged in February. Looking past the headline data was less flattering, revealing that more people opting out of the workforce is the primary reason for little movement. An issue that was particularly troubling when looking at the data for young adults.
Canadian Employment Unchanged, Nova Scotia An Exception
Canadian employment barely budged last month, which is good news considering the environment. Seasonally adjusted employment added 1k jobs to hit 21 million in February. Considering the agency’s margin of error was 32x larger than last month’s gains, it’s probably best to focus on the trend rather than a single-month.
Only one province showed a substantial negative movement: Nova Scotia. Employment fell 0.8% (-4.3k jobs) last month, while all other provinces remained unchanged.
Canada’s unemployment didn’t budge much. The seasonally adjusted unemployment rate remained 6.6% in February, about 0.7 points higher than last year. The rate has improved recently but it’s still 0.7 points higher than last year. Experts generally believe an increase of 0.5 points is enough to trigger a recession within 12-18 months.
Headline Employment Data Less Flattering With Workforce Shift
The headline data looks less benign under the hood. Last month the agency estimated the population grew by 47.4k people, but its net labor force shrunk by 16.8k people in that span. Canada’s youth population was of particular concern, which added 5.5k people to its population—but shed 35k from the workforce. How is that possible? Well, this is an issue of the participation rate.
Canadians Are Opting Out of Work, Especially Young Adults
The participation rate is the share of people in the population who are actively involved in the labor market. It includes those employed and those actively seeking work, and available during the survey’s “reference week.” Retirees are obviously not a part of the labor force, however, neither are full-time students seeking work—until they’re employed. Adults who don’t have a job, want one, but aren’t actively looking—aren’t considered unemployed. They’re deemed non-participants in the workforce.
Canadian jobs and unemployment barely budged, but participation decreased sharply. The participation rate fell 0.2 points to 65.3% in February, representing two-thirds of the decline over the past year. The trend is particularly concerning for youth participation, which fell 0.8% in February. The decline was larger than the reduction in the demographic’s unemployment, while its population climbed 5.5% over the same period.
The job report may seem boring, or even good considering the geopolitical headwinds. However, there’s some significant concerns brewing regarding the job data and population growth. Until recently, the big concern was the country was adding people faster than its economy could allocate those resources. That problem still remains, the unallocated resources just shifted from those who are actively seeking jobs to those who are no longer seeking employment. That’s still the same issue when it comes to economic growth.