Labor market weakness might eat into Canadian purchasing power

Labor market weakness might eat into Canadian purchasing power

Labor market weakness might eat into Canadian purchasing power

The Canadian economy suffered an unexpected loss of 92,000 part-time jobs in August, offsetting a 40,400 increase in full-time employment and stoking fears of lowered purchasing power across the country’s housing markets.

This represented the second largest month-over-month decline since the great recession last decade, Statistics Canada said late last week.

The losses pushed the national unemployment rate to 6%, up from July’s 5.8% and exceeding expert predictions of 5.9%. Meanwhile, wage gains have ground down to their slowest rate this year.

Ontario took the worst hit in employment numbers last month, losing 80,100 part-time jobs. This was the province’s largest employment drop since 2009.

Read more: Interest rate hikes might harm the economy over time

A fresh report by Point2 Homes noted that a convergence of various trends – including weaker purchasing power brought about by unemployment – has caused the national home ownership rate to decline for the first time in nearly half a century.

“The burst of China’s speculative bubble sent shock waves through the global economy… with especially large effects on Canada’s resource-based, export-driven economy,” the report explained.

“The collapse of oil prices and the country’s heavy reliance on exports to its Asian partner pushed Canada into a recession. The ensuing economic deceleration affected wages, hence lowering people’s purchasing power. Home prices, however, kept going up, leading to the decline in homeownership rates revealed by the 2016 StatsCan numbers.”

 

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