Canada recorded an unemployment rate of 6.2% in May, which represents an increase of 1% over a year. This increase could influence the key rate in the coming weeks, according to an economist.
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In Quebec, this percentage increases to 9.5% among young people, says Clément Gignac, senator and economist in an interview with LCN. This worrying trend is also spreading in Ontario, where the rate stands at 15% among young adults, according to him. It was around 11% in May 2023.
“Clearly, we have indications that things are slowing down in the job market,” he says.
The expert pointed out that the Governor of the Bank of Canada, Tiff Macklem, had spoken on this subject. He reported Monday that workers are demanding less for better pay than before, due to the lack of employment. There would therefore be “less tension on the labor market” on this subject, notes Mr. Gignac.
This phenomenon could also influence the key rate, according to him.
“We are in excess capacity, so it’s not just inflation, now the employment figures will be important in the Bank of Canada’s decision to lower rates [directeurs]», Explains the economist.
The rise in unemployment occurs alongside that of inflation. This increased slightly to 2.9% in May 2024 compared to the increase of 2.7% recorded a month earlier. The prices of food, rent, cell phone plans and travel notably played a role in this increase.
The senator, however, wishes to reassure that the key rate could see a further reduction for the month of July. “It’s certainly still possible,” he says.
Watch the full interview in the video above.
