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Through a labour force survey and other tools collected by Statistics Canada, the unemployment rate measures: the proportion of workers in the labour force who do not currently have a job but are involved in an active search for work. People who have not looked for work recently are not included in this measure and thus don't factor into the employment levels.
It's important to note that the rate measures the percent of unemployed job seekers in the labour force—the sum of employed and the number of unemployed—and not the whole population.
Unemployment rates are followed closely by the government through Statistics Canada from a public administration, services, finance, inflation, employment insurance, and labour market perspective, as well as by businesses in a professional capacity.
Current comparable data is contrasted with historical data from the previous month, a month earlier, a three-month moving average or to report on the annual pace when compared with the same period the previous year, whether it's at peak or falling. The rate of employment in certain groups, like the youth unemployment rate, is the total number of unemployed people in this group expressed in percentage.
By comparing data from week to week, or month to the previous month, and including seasonally adjusted data, the government is able to report on trends. For example, if unemployment is at a new record low or the lowest rate in years, it may speak to a rise in the health of the economy or the success of a "create jobs" government initiative.
There are several factors that impact the unemployment rate, causing it to move upwards or downwards. Although a clear impactor is a change in the number of job seekers, the unemployment rate may also be affected by a change in the size of the labour force. When people face long-term unemployment, or there's a scarcity of full-time jobs, workers become discouraged or apathetic and stop looking for employment, and they exit the labour force.
It's common in economic downturns, such as in times of inflation, for the labour force to decrease (or the number of those seeking jobs to increase more slowly than usual) in size as many give up on finding work and are therefore no longer counted as officially unemployed. During these times, those that were participating in a job search are no longer on that page and turn to government services to provide subsidized wages or for those services to completely replace their lost income.
For that reason, Canada's economists often point out that the unemployment rate is misleading and understates the job search market’s weakness. Conversely, during an economic recovery, high unemployment rates can persist despite an increase in jobs as more workers begin looking for work and re-enter the labour market.
Underemployment includes three groups of people involved in the labour force: unemployed workers who are actively looking for work; involuntarily part-time workers who want full-time jobs but have had to settle for part-time hours; and so-called marginally-attached workers who want and are available to work in part-time or full-time jobs, but have given up actively looking.
Together, these three groups provide a more comprehensive measure of slack in the labour force. This measure does not include people who have had to settle for employment below their skill or experience level, such as the mechanical engineer who is driving a cab. There is currently no data that track this form of underemployment.
Compared to other labour force statistics, the underemployment rate is relatively new; Statistics Canada and the public administration only began to track underemployment as it is currently measured in 1994.
The lack of historical data can make it difficult to put current job numbers to date in context with past labour market performance.
Nevertheless, underemployment is a significant economic indicator because of its broader definition of the underutilization of the labour market.
It's crucial to put the data from the labour force survey into context by contrasting it with, for example, professional jobs and hospitality and food services (because they require very different skill sets and vocational requirements from each other).
There are also times when Statistics Canada must compile seasonally adjusted data as well. This is data that requires a seasonal adjustment. Although on its face it may seem like a record high or decline in wages or jobs, it may be entirely on trend for wages, jobs, or full employment search given the date or time of year, and thus should not be identified as an outlier.
The Employment-to-Population Ratio is a helpful, broad-brush measure. It simply shows the number of workers currently employed, whether it be as a naval engineer, in the retail trade, or in food services, as a share of the total working-age population, which is the number of people- civilian, non-institutionalized people, 16 years of age or older.
This measure does not typically change dramatically from month to month, but even minor changes help identify which segments of the population are the most susceptible to job loss or gain.
This ratio also complements the unemployment rate in assessing the health of the labour market. The unemployment rate has shortcomings that the employment-to-population ratio does not.
As mentioned above, the unemployment rate is affected by the size of the labour force. As the labour market falters, the unemployment rate may actually fall if workers give up looking for work. As the labour market is recovering, unemployment could rise because more people are entering the labour force as they start to look for work again. It's also usually marked by an increase in wages.
The employment-to-population ratio, because it is unaffected by voluntary changes in labour force participation, is a useful indicator of current labour market conditions and can be a precursor to not only rising inflation but potential downturns in the real estate market.
Lows in the employment-to-population ratio correspond with economic downturns. The employment-to-population ratio holds clear and discernible implications for the labour market, both among and between segments of the population. However, double-check first if the information includes seasonally adjusted data.
Census metro areas (CMA) represent a central population centre that is adjacent to fringe or rural communities with a strong socio-economic connection with cores. Usually, CMAs have around 100,000 residents.
According to the Canadian Real Estate Association, the unemployment rate in Toronto was 5.9% as of August 2022, unchanged from the previous month of July. The unemployment rate is below the peak in July 2020 and is below the long-run average.
You may ask why a Canadian-wide real estate organization cares to report on Toronto employment statistics. Toronto is Ontario's most densely populated city and Canada's too!
Ontario is the most populated province in Canada as well, so it's uniquely qualified, above and beyond Alberta, Prince Edward Island, Newfoundland and Labrador, New Brunswick, Nova Scotia or any of the major cities from Saint John, Greater Sudbury, Montreal, St. Catharines, Niagara area or anywhere else in Ontario or Canada, to serve as a micro-economy of the larger economy.
To put it another way, what happens in Toronto, Ontario, Canada can be used to report anticipated trends for the country at large; And that's why it matters to real estate folks.
The Canadian Real Estate Association also reported that there were 2,900 fewer full-time jobs in August 2022 compared to the month preceding. A loss of 8,600 part-time positions led to a decrease of 11,500 total jobs in August. The real estate outlet also reported that full-time employment was still down 2,900 jobs from the peak in July 2022.
It's not all bad news from the Canadian Real Estate Association for the month of August: The number of full-time jobs in August was up from the previous month in agriculture, construction, manufacturing, transportation & warehousing, the financial sector, and business & building services.
Full-time job losses in August occurred in natural resources, utilities, trade services, professional & scientific services, education, healthcare, information & cultural services, accommodation & food services, and public administration, according to the real estate juggernaut.
The Canadian Real Estate Association reported the UR in Canada was 5.1% as of August 2022, up 0.1% from the previous month. The unemployment rate stood at 7.8% below the peak of June 2020 and is below the long-run average.
If we turn to our good buddies at StatsCan (did you think I was going to lean on the Canadian Real Estate Association again?), they're reporting that North Manitoba has the highest UR with over 27%. In Ontario, Windsor gets the dubious honour of having the highest UR with 8%.
Statistics Canada, labour survey p 14-100287-01, seasonal adjustment data reported: Ontario averaged 5.09% for August, a little lower than its January 2020 pre-pandemic rate (6.4%).
Toronto Regional Real Estate Board reported that Toronto unemployment rates were 62% on May 20, down 0.1% over April. The employment rate is 8.7% lower than it climbed in July 2020 and is also less than average across the entire economy.
Understanding the correlation between Canada's unemployment rate and its relationship to real estate is the key to navigating today's dynamic housing market.
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