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What Was Canada’s Unemployment Rate in May?

The Canadian unemployment rate hit a record 3.7% in May as the economic shutdown from COVID-19 continues to hurt the Canadian economy. While this number is expected to drop as the Canadian economy opens up over the coming months, this may not be enough to save second and third quarter results on Bay Street. When it comes to the economy, Canadians hold the gloomiest outlook among their G7 peers, which isn’t surprising when you look at how COVID-19 has hit our incomes and increased debt loads.

According to Statistics Canada, the unemployment rate hit an eye watering 13.7% in May—the highest rate since comparable data was recorded back in 1976. To show just how much COVID-19 has hurt the Canadian economy, in February, before COVID-19 shut down the economy, the unemployment rate was 5.6%. In March, Canada’s unemployment rate increased to 7.8% and in April it jumped to 13.0%.

The number of Canadians who wanted to work but did not look for work was down slightly, but remained high, at 1.4 million. In April, that number stood at 1.5 million.

Unemployed people not actively looking for work are not counted in official unemployment figures. If they were though, Canada’s adjusted unemployment rate was a whopping 19.6%; unchanged from the previous month.

Will Canada’s Consumer Confidence Hurt Stocks?

The shutdown of the Canadian economy as a result of COVID-19 and social distancing seriously hurt Canada’s consumer confidence levels. But, after months of record lows, it is starting to tick up. The index, which currently stands at 39.3, is still near record lows though. In fact, Canadians have the worst outlook about their own economy in the G7.

First off, our financial position was bad even before COVID-19 hurt the markets. Since the 2008-09 Financial Crisis, the debt-to-income level in Canada has soared to 176% and the savings rate has fallen to 3.6%. During the same time frame in the U.S., the debt-to-income level has dropped to 136% and the savings rate has climbed to 7.8%.

COVID-19 exacerbated the problem. In Canada, total wages and salaries tumbled by 23% from February to April. In the U.S., the number was 10%.

Despite all the money being handed out by Ottawa during COVID-19, American’s actually fared better than we did. In Canada, CERB payments were $500 per week, totally about 45% of median income for full-time workers. South of the border, the average weekly unemployment benefits comes in at 101% of median, full-time income.

Add it up; the hit to Canadian income and increased debt levels are expected to curb economic growth over the coming months.

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