For young people in Canada, particularly those between the ages of 15 and 24, the summer of 2024 brought an unexpected challenge: the most difficult job market since 2012. According to Statistics Canada, the unemployment rate for students returning to school over the summer months rose to 16.7%, compared to 12.9% the previous year. This is the highest rate in over a decade, excluding the pandemic period.

Why Is Youth Unemployment Rising?

It’s not that there are fewer jobs available for young people, but rather, more young people are seeking employment. As Desjardins economist Randall Bartlett explains, the significant population growth among young workers is a key factor. Over the past year, one-third of new immigrants and half of non-permanent residents were under the age of 25, contributing to an 8% increase in the number of workers in this age group.

This surge in the young workforce has pushed up both youth and new immigrant unemployment rates, which tend to overlap significantly.

Broader Implications for the Canadian Job Market

The rise in youth unemployment is also contributing to the overall national unemployment rate, which increased from 6.4% to 6.6% in August 2024. Despite the creation of 22,000 jobs in August, this is the highest rate since May 2017, excluding the pandemic period.

In Quebec, unemployment remained steady at 5.7% in August, though the province has seen an increase in job seekers over the past year. With 67,000 more people looking for work, the unemployment rate has risen despite the creation of 14,700 jobs in August.

Economic Growth vs. Job Market Stagnation

Canada’s job market has been relatively stagnant for the past four months, even as the population continues to grow. With the workforce expanding, especially among younger workers, job creation has not kept pace. Economists are concerned that the national unemployment rate could reach 7% by the end of the year.

Despite a 5% increase in average hourly wages, which outpaces the current inflation rate of 2.5%, the weakening job market may prompt the Bank of Canada to reduce its key interest rate sooner rather than later.

Looking Ahead

With the Bank of Canada closely monitoring economic conditions, a soft landing for the Canadian economy is still possible. However, economists predict that the rising unemployment rate will remain a concern in the months ahead as the country seeks to balance population growth and job market performance.