Canada Housing Market

Toronto’s unemployment crisis is a major concern for Canada’s economy. Data from Statistics Canada reveals that Greater Toronto’s unemployment rate sharply increased in May, contributing significantly to the national trend of rising unemployment. This surge in unemployment, particularly in Southern Ontario, highlights a troubling shift from economic driver to a significant drag on the national economy.

Toronto Accounts for a Third of Canada’s Unemployment Increase

Canada’s national unemployment rate reached 6.1% in May, translating to 1.34 million unemployed individuals. Over the past year, the rate increased by 1.0 percentage point (+250.9k people), marking a 20% rise. Greater Toronto played a significant role in this surge, accounting for a third of the national increase.

In the past year, Toronto’s unemployment rate rose by 1.0 percentage point (+83.8k people) to 7.9%, totaling 317.2k unemployed individuals. This means Toronto now has more unemployed people than the entire province of Quebec, which has 241.2k unemployed.

Toronto’s current unemployment numbers are the highest they’ve been outside of the pandemic period in at least two decades. Given the population growth, this might represent a record in the sheer number of unemployed individuals.

Rapidly Rising Unemployment in Southern Ontario

While unemployment is rising nationally, other major Canadian cities are not experiencing the same rapid increase. For instance, Vancouver’s unemployment rate is 5.7% (97.3k people), and Montreal’s is 5.8% (147k people). Calgary is an exception with an unemployment rate of 8.1% (83.5k people), higher than the national average.

Southern Ontario cities are struggling significantly. Windsor has an unemployment rate of 8.5%, St. Catharines-Niagara 7.9%, and Hamilton 7%. These high rates have pushed Ontario’s overall unemployment rate to 6.8% in May, exceeding the national rate of 6.1%.

Implications for Toronto’s Real Estate Market

The growing unemployment in Greater Toronto provides insight into its struggling real estate market. Despite rapid population growth, rental vacancies are rising, with both office spaces and residential rentals exceeding pre-pandemic vacancy rates. Additionally, home sales are slow, and the mortgage delinquency rate is now at its highest level in nearly a decade.

Conclusion

Toronto’s surging unemployment rate is a significant concern, not just for the city but for Canada as a whole. With one-third of the nation’s unemployment increase concentrated in Greater Toronto, and Southern Ontario’s cities struggling, the economic impact is profound. The upcoming months will be crucial in determining whether recent rate cuts can provide the necessary relief to stabilize the region’s job market and real estate sector.