In remarks published by the Bank of Canada, External Deputy Governor Nicolas Vincent said Canada’s labour market has slowed and now points to mild excess supply, but some of the weakness may reflect structural change rather than only a cyclical downturn. Employment growth has averaged about 6,000 jobs a month since early 2025, down from almost 34,000 in 2024, the employment rate has fallen 0.6 percentage point since January 2025, and unemployment has remained in a range of about 6.5% to 7%. Vincent said the Bank is focusing on three trends, low turnover, rising long-term unemployment and weak conditions for young people, because the distinction between cyclical and structural forces is important for judging inflation and the limits of monetary policy. Layoffs have stayed low, but hiring and job switching have weakened sharply, leaving job-finding close to its lowest level in 30 years and creating a low-hire, low-fire labour market that could slow worker reallocation and productivity. The share of unemployed people searching for work for more than six months is at its highest level since the early 2000s outside the pandemic, with evidence of skills and experience mismatches as job postings require more experience and the share of unemployed people who have never worked has increased. Youth unemployment has risen from 9% in 2022 to above 14%, with teenagers hit hardest. Vincent pointed to cyclical pressures from past rate increases and uncertainty around US trade policy, but also to possible structural drivers including population aging, fewer entry-level opportunities, immigration-related competition in lower-skill jobs and possible AI exposure in junior roles. He said the Bank will keep using microdata, business and consumer surveys, regional analysis, scenario analysis and a new multi-sector model to separate structural change from cyclical weakness and assess the implications for inflation and monetary policy.
Bank of Canada2026-05-26
Bank of Canada says low turnover and rising youth unemployment may point to structural labour market change
The Bank of Canada’s External Deputy Governor Nicolas Vincent said Canada’s labour market has shifted to mild excess supply, with slower employment growth, a lower employment rate and unemployment around 6.5%–7%, and that some weakness may reflect structural rather than cyclical factors. He highlighted low turnover, rising long-term unemployment and deteriorating conditions for young people, and said the Bank is using microdata, surveys, regional and scenario analysis, and a new multi-sector model to distinguish structural change from cyclical weakness and assess implications for inflation and monetary policy.