Last week, Statistics Canada released April’s employment numbers, reporting that Canada’s unemployment rate had remained stagnant at 6.1%, up 1% from April 2023.
However, economists say that the headline figure of 90,000 jobs added to Canada’s economy is not as impressive as the Liberal government would suggest.
In a comment to True North, Fraser Institute economist Matthew Lau said that Canadians should not be impressed with April’s job numbers, as much of the job growth has not come from private sector growth.
“In the past 12 months, there has been 5% public sector job growth vs. 1% combined private sector + self employment,” said Lau.
“Where employment growth comes from matters because in the private economy, people are employed producing goods and services people demand – whereas in the public sector, people are employed producing goods and services that politicians think people ought to demand.”
According to a report from the Fraser Institute, the share of government workers in the total workforce has risen to 21.2% as of 2022, higher than it has been for decades.
Lau noted that the growth in the public sector has become a trend since Justin Trudeau’s Liberals formed government in 2015.
“That the public sector continues to drive employment growth is an unhealthy sign: since the Trudeau government took office, the public sector employment growth rate has been more than double the private sector + self employment growth rate, and the economy has clearly underperformed.”
Despite adding 90,000 jobs in April, the unemployment rate increased slightly since Canada’s population growth averages out to more than 100,000 newcomers per month.
The Trudeau government has drastically increased the amount of new immigrants and non-citizen residents they would welcome into the country, ballooning Canada’s population to over 41,000,000.
Furthermore, the rate of growth for hourly monthly wages have been decreasing, cooling from 5.1% to 4.7% in April.
Canada’s economy also lost 11,000 jobs in the construction industry, a key sector for provinces and the federal government, as they set ambitious targets to increase the country’s supply of housing.
The Canadian Housing and Mortgage Corporation projects that a drop in housing starts in 2024, and that rates of new construction from 2025-2026 won’t reach 2021-2023 levels.
Both Prime Minister Trudeau and Ontario Premier Doug Ford set ambitious targets to build new homes, pledging to build 3.9 million and 1.5 million homes respectively by 2031.
BMO’s chief economist Douglas Porter warned that April’s job numbers may lead the Bank of Canada to reconsider dropping interest rates come the next interest rate announcement on June 5th, and that the inflation rate must drop if there are hopes the central bank will drop rates.
“Today’s showy headline jobs increase will give the Bank of Canada some pause, since it reinforces the point that the economy is clearly not rolling over,” said Porter.
“Markets are now back to viewing the June rate decision as a toss-up, with the April CPI on May 21 looming even larger.”
Despite the less-than-stellar assessment of Canada’s economy in the wake of April’s job numbers, the Trudeau Liberals continue their optimism.
Deputy Prime Minister Chrystia Freeland said that the job numbers were “great news” and that their government’s plan is working.
“Today, 1.3 million more people are employed in Canada than before the pandemic,” said Freeland, without acknowledging Canada’s population growth.
“Our economic plan which ensures fairness for every generation is working!”