Canada’s unemployment rate down to record-low 5.1%

Canada's unemployment rate hit a new record-low of 5.1%, the lowest point it's been since comparable data became available in 1976.

Statistics Canada reported in its most recent Labour Force Survey that the labour force gained 39,800 jobs in May, mostly in full-time work. More than 135,000 people found full-time work last month. Gains were led by women workers in all age groups.

"As we commence the ritual of filling patios and hit the road for overdue vacations, employers continue to search for workers to meet heightened demand," said TD Bank economist James Orlando in a commentary. "This has job vacancy rates at record levels, making it clear that the Canadian economy is operating beyond full employment."

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Based on the results from Statistics Canada's Job Vacancy and Wage Survey for March, the ratio of unemployed people to job vacancies reached an all-time low of 1.2, highlighting labour supply pressures facing employers seeking to attract and retain employees. Simply put, Canadian employers cannot find enough people to work, an issue which could be here to stay.

"With an aging population, in the years ahead the number of retirees exiting the workforce will exceed new workers entering it," writes economist Sean Adams with the Conference Board of Canada. "The ensuing drop in participation rates will result in unemployment rates staying low even as the Canadian economy achieves limited employment growth. That’s good news for job seekers but could make it increasingly difficult for businesses to find staffing. In other words, current labour shortages might only get worse."

Although one potential source of labour supply is those who are not actively participating in the labour force but report that they want to work. In May, there were 409,000 of these potential workers. However, the number of potential workers comes up short of the more than 1 million job vacancies reported in the job vacancy survey.

Canada will need to continue welcoming immigrants to help meet these labour demands. In 2022, Canada is set to admit 431,645 new permanent residents, a new record. In the first quarter of 2022 alone, Canada has landed nearly 114,000 new permanent residents and is on track to meet this target.

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