Analysis from my colleague Sylvain Schetagne:
A decreasing unemployment rate is not always a sign of a strong labour market.
The decrease in the unemployment rate from 7.4% to 7.2% observed between June and July 2011 is mainly due to Canadians leaving the labour market, not to their finding jobs.
In July, the number of unemployed Canadians decreased by 35,700 simply because 28,600 people left the labour market at a time when only 7,100 jobs were created. In fact, if those workers had not left the labour market, the unemployment rate would have stayed the same.
Both the employment rate (the proportion of the population that has a job), and the participation rate (the proportion of Canadians active in the labour market), declined last month. This means a smaller proportion of Canadians are working or active in the labour market.
Young workers aged 15-24 continue to have an unemployment rate of twice the level observed for all Canadians. In July, the unemployment rate for young workers was 14.1%. The proportion of young workers working part time also increased significantly last month, from 46.7% to 47.7%. For this age group, 22,200 full-time jobs were eliminated, while 24,600 part-time jobs were created.
Summer students also continue to suffer. Students aged 15 to 24 -- and who are going back to school in the fall -- experienced an unemployment rate of 17.4% in July. This is 0.5% higher than July of last year, when their unemployment rate was 16.9%.
Finally, it is important to note that a "public sector recession" is underway. In July, 71,600 public sector jobs disappeared. Many of those jobs were lost in education (-30,000), a sector that always experiences a decrease in July due to lay-offs of non-tenured teachers and support staff. Job losses were also observed in health and social assistance (-39,400) and in public administration (-11,800).
This article was first posted on The Progressive Economics Forum.
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