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Opinion: Don’t panic about the unemployment rate

5 0
07.01.2025

The labour market is pumping out jobs. The problem is too many would-be workers, which immigration policy is pivoting to try to address

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By Don Drummond and Parisa Mahboubi

Statistics Canada announces the unemployment numbers for December on Friday. Media reporting last month on the release of November’s numbers painted a picture of economic distress, given the jump in the overall unemployment rate from 6.5 to 6.8 per cent. But the alarmed response missed critical developments in the underlying data: the reality is that Canada has a dynamic and robust labour market characterized by extraordinary labour force growth and steady employment gains.

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Statistics Canada’s report on the November numbers provided crucial context: employment rose by 51,000 jobs from October to November, or 0.2 per cent, which is pretty good by usual standards. The “problem” was that the labour force grew by an unprecedented 138,000 people (or 0.6 per cent). As a result, the unemployment rate rose sharply even though employment grew more than respectably.

But this kind of disconnect between headline numbers and economic reality is particularly pronounced during periods of rapid population growth. From October to November, the number of people aged 15 and over grew by 80,000, while the labour force participation rate rose from 64.8 per cent to 65.1 per cent. (The “part rate,” as economists call it, is just the number of people either employed or looking for work as a share of the population.)

The year-over-year numbers are equally striking: Employment in Canada grew a robust 1.6 percent........

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