Posthaste: Canada's job market could be in worse shape than we thought

financialpost.com:

All eyes will be on Canada’s job numbers tomorrow for clues not only on how the economy is faring, but also what the Bank of Canada might do next.

Last month we got a surprise. A gain of 25,000 jobs was expected, but instead the economy lost 2,200 jobs and the unemployment rate shot up to 6.1 per cent, the highest in more than two years.

In fact, outside of the pandemic, Canada’s jobless rate hasn’t been above six per cent since 2017.

But job numbers are volatile and hard to predict, so it’s very possible that tomorrow’s reading could rebound, say economists.

Looking beyond the headline number, however, there are reasons to believe that Canada’s labour market is already weaker than it appears, argues CIBC economist Andrew Grantham in a recent note.

One is the economy’s reliance on public sector hiring, which serves to mask weakness in the private sector. Government jobs have driven more than 60 per cent of job growth over the past year, says CIBC. It estimates that if these jobs had only grown in line with the population and affected workers had not found employment elsewhere, Canada’s jobless rate would be 0.6 per cent higher.

Then there is the sticky question of counting non-permanent residents, who have seen their job prospects deteriorate the most over the past year.

The number of non-permanent residents has risen by about 1.5 million since 2019, according to population estimates, but Statistics Canada’s tally in the Labour Force Survey is an increase of only 600,000.

“With the unemployment rate for those non-landed immigrants that are counted having risen a lot more than the rest of the population over the past year, it’s possible that the jobless rate would actually be higher if a greater proportion of this group