Canada's unemployment rate rose to 6.6% in August, reaching the highest level last seen more than seven years ago without counting the pandemic years 2020 and 2021, based on data released on Friday.
The economy added a net 22,100 jobs in August, driven entirely by part-time employment, Statistics Canada said.
Analysts polled by Reuters had forecast an unemployment rate of 6.5% and a net job gain of 25,000 in August.
Canada's economy has lost momentum under the pressure of high interest rates, and much of the growth seen earlier this year was largely driven by population growth.
However, when GDP growth does not keep pace with population growth, unemployment rises, sparking fears of a recession.
Canada's unemployment rate has risen by 1.6 percentage points since January 2023, which some economists have described as worrisome and they have called for deeper rate cuts from the central bank to stimulate economic growth.
The biggest increase in unemployment was among youth aged 15 to 24 compared to the previous year, and this summer's unemployment rate among them was the highest in eight years, Statistics Canada reported.
The Bank of Canada this week cut its key policy rate by 25 basis points to 4.25%, its third move in a row, and Governor Tiff Macklem said deeper rate cuts could be implemented if the economy needs support.
Slow job growth is one of the reasons that could slow the GDP growth forecast for the third quarter, he said in his speech.
Financial markets are fully expecting a rate cut of another 25 basis points next month and in December.
The employment rate, or the number of people with a job out of the total working-age population aged 15 and over, has fallen steadily and reached 60.8% in August, Statistics Canada reported. It has declined in 10 of the past 11 months.
Growth in average hourly wages for permanent workers slowed to an annual rate of 4.9% in August from 5.2% in July, the statistics agency said. Wage growth figures, which are partly responsible for keeping inflation high, are closely watched by the Bank of Canada.
