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Florence Jean-Jacobs
Principal Economist
Economic News
Despite an Economic Rebound, Quebec’s Job Market Is Slackening
August 9, 2024
Highlights
- After a steep drop of nearly 18,000 jobs in June, employment in Quebec went down once again in July, this time by 9,100 jobs (table 1).
- The employment figures were mixed, with sharp losses in full-time employment (-35,300) versus gains in part-time employment (+26,200).
- Similarly, a plunge in private sector employment (-34,600) was only partially offset by upticks in the public sector and self-employed workers.
- The unemployment rate remained unchanged at 5.7%. This was due to a reduction in the labour force participation rate, which slumped to its lowest (64.2%) in two years.
- However, the provincial unemployment rate was driven up by regions that were heavily weighted due to their large populations (particularly the Island of Montreal, where unemployment was 7.6%). Three regions (Abitibi-Témiscamingue, Saguenay-Lac-Saint-Jean and Chaudière-Appalaches) actually reported unemployment rates of less than 3%, down from a year ago (table 2).
- Meanwhile, wages rose in July: The year-on-year increase in average hourly earnings came in at 5.9%, versus 4.9% in June. New collective agreements in Quebec’s public sector, which have been in force since the beginning of 2024, helped push up wages from last year. But wage gains were also observed in several private-sector industries.
- According to Statistics Canada, young people and recent immigrants have been particularly hard hit by the current slackening of Canada’s job market, and Quebec is no exception.
- Unemployment among young people (ages 15 to 24) climbed to 12.3%. If we exclude the pandemic, youth unemployment hasn’t been this high since 2016. But a reduction in unemployment among people 25 and up helped offset this jump.
Comments
The biggest net losses were seen in wholesale and retail trade, finance and real estate, as well as accommodation and food services. However, there were job gains in the transportation, professional services and construction industries.
July’s sharp losses in private sector and full-time employment show that the Quebec job market is still cooling (graph). The private sector has shed 55,700 jobs year-to-date, and the July contraction was the worst since January 2022. In addition, hours worked slipped 2.3% from July 2023.
Implications
The weakening job market may come as a surprise, as real GDP External link. and other economic indicators have improved substantially (see our Desjardins Leading Index External link.). But it’s pretty normal for there to be a lag between economic growth and its subsequent effects on the job market. Employers typically cut down on hours and hiring after a few months of softening demand for their goods and services.
What we’re seeing is a rebalancing of the Quebec job market after the economic slowdown in the last three quarters of 2023. The unemployment rate is expected to keep rising gradually to end up at about 6% by the end of 2024, after which it will probably start trending downward (see our Economic & Financial Outlook External link.). Young people are clearly bearing the brunt of the job market’s rebalancing. People in this age group had also been hit hard by job losses during the pandemic. For them, the employment rebound was short-lived.