Canada’s job market hasn’t kept up with its population growth, and that’s bad news for major real estate markets. Statistics Canada (Stat Can) data shows unemployment continued to rise in June. A deep dive shows the weakness is concentrating in some of the country’s most important real estate markets. Just five cities represent most of the unemployment growth in the past year, half of which was located in Toronto.
Canadian unemployment has generally been on the rise. The unemployed population grew 0.2 points (+29k people) to 6.3% (1.37 million people) in June. Since last year, the rate has added 1 point (+250.4k people), hitting the highest level since 2022. It also happens to be the highest non-pandemic unemployment rate since October 2017, with one key difference—there’s a lot more people this time around.
As mentioned last week, Canada’s unemployment story is less about job losses and more about population growth. Immigration is rising much faster than the country’s economic capacity to create jobs, leading to much higher unemployment for new immigrants and young adults competing for similar roles. On that note, it’s no surprise that most (60%) of the unemployment growth in the past year was concentrated in major real estate markets—Toronto, Vancouver, Calgary, Montreal, and Halifax. Half of the collective growth in those markets was located in Toronto.
The unemployment rate for Canada and selected cities, seasonally adjusted 3-month moving average.
Source: Statistics Canada; Better Dwelling.
Toronto is Canada’s largest city, and one of the most popular spots for people looking to start a career. That might be a mistake. The unemployment rate made some progress by falling 0.1 points (-2.3k people) to 7.8% (314.9k people) in June. Over the past year, the region’s unemployment rate added 1.7 points (+73.4k people). Take a moment to appreciate just how many people that is.
In just 1 year, its unemployed population increased by more than the equivalent of Fredricton or Ft. McMurray’s total population. That’s just the growth, not the total unemployed population. There are so many unemployed people concentrated in Toronto that if they got together and formed their own city, it would be Canada’s 14th largest—right behind Halifax.
The share of Canada’s unemployed population located in selected cities.
Source: Statistics Canada; Better Dwelling.
Over 1 in 5 (23%) people unemployed in Canada are concentrated in Toronto. The region’s growth over the past year was also 29% of total growth, meaning its overweight in its contribution.
Vancouver proves that not all big cities are experiencing problems—it’s doing better than average. Its unemployment rate fell 0.1 points (-1.6k people) to 5.6% (95.7k people) in June. Over the past year, the rate has increased 0.2 points (+6.3k people). Vancouver doesn’t just have a lower than average unemployment rate, it also has much slower unemployment growth.
Despite Calgary’s resilient real estate market, it’s home to one of the highest unemployment rates in Canada. The rate climbed 0.4 points (+3.8k people) to 8.5% (87.3k people) in June. It’s up a whopping 2.3 points (+27.3k people) since last year—more than double the growth rate of the national average. Despite this, it’s one of the only markets where real estate continued to demonstrate strength.
Montreal’s unemployment rate is just below the national average, but things are changing fast. The rate increased 0.4 points (+9.3k people) to 6.2% (156.3k people) in June. It’s now 1.7 points (+41.8k people) higher than last year. A rate that comes in lower than average is good news, but last month’s move was so large that it represented nearly a quarter of unemployment’s annual growth. Maybe it’s noise, maybe it’s not—but worth keeping an eye on.
Halifax real estate and it’s job market have at least one thing in common—it’s barely moving. The region’s unemployment rate increased 0.3 points (+0.8k people) to 5.8% (17.2k people) in June. It’s now 0.1 points (+1.4k people) higher than last year. An incredibly low rate, but the month’s move was 3x the annual change. That implies a very fast reversal of progress made over the past year.
Canada’s employment market is an odd state—unemployment is rising, but not due to a loss of jobs. It’s mostly due to the country’s population growing much faster than the economy’s ability to absorb this labor surge. As a result, the burden is primarily falling on recent immigrants and young adults who compete for similar, low experience roles. Not surprisingly, that skews the problem to the country’s major cities where those populations are located.
