June 9, 2025 | We Got No Jobs

Happy Monday Morning!

It was a tough week for mortgage shoppers in Canada. The Bank of Canada held rates for the second consecutive meeting. BoC’s Macklem emphasized a wait and see approach, noting, “The Bank’s preferred measures of core inflation as well as other measures of underlying inflation moved up in April. We will be looking carefully at the next two CPI reports.”

Markets are now expecting the Bank of Canada to hold rates again in July, with only one more rate cut pencilled for this year. Bond yields also pushed higher, with the 5 year pushing up nearly 15bps on the week. Like we said, tough week for mortgage shoppers.

Hard to believe considering the soft labour market report that followed the BoC.

Employment was virtually unchanged in May, marking the second consecutive month of negligible job growth and a net loss of 15,300 jobs over the past four months. The unemployment rate ticked up to 7.0%, the highest since September 2016, excluding the pandemic years.

The unemployment rate amongst Canada’s youth was particularly dire. Unemployment for returning students aged 15 to 24 was a whopping 20.1%, up from just 11.4% in May 2022.

It turns out, there are repercussions for unfettered immigration. Lest we forget when immigration minister turned housing minister, Sean Fraser opened the door to 838,000 study permit applications in 2022, followed by a record 1,025,000 study permit applications in 2023! Not to mention the record number of temporary foreign worker permits which ultimately ballooned the growth rate of non-permanent residents to 1.3 million in 2023.

Unfortunately we now have too many foreign students and temporary workers and not enough jobs. These new landed immigrants are now competing for low-skilled summer jobs with Canadian youth. The result is the highest unemployment rate for Canada’s youth since the financial crisis.

A policy failure of biblical proportions. Not only are Canada’s youth priced out of home ownership, but their rents were inflated through record immigration, and now they can’t get a job either. Oh well.

Years later and we are still dealing with the cleanup. After it was announced the federal government would clamp down on non-permanent resident growth, suggesting many immigrants would not be eligible for permanent resident status and would need to return home, many began to file for asylum.

Since 2015 there has been a tenfold increase in asylum claims, but that number has skyrocketed in recent years.

New legislation tabled this past week would prohibit individuals who have been in Canada for more than one year from filing an asylum claim. Currently, there are no time restrictions on when someone already in Canada can make an asylum claim, whether at a port of entry or inland. This change aims to limit bogus claims by restricting eligibility based on the duration of stay, potentially making those who miss this deadline subject to deportation.

This is just another important policy change required to clean up the immigration system, and hopefully return some sanity to the housing market. Remember, rents are already falling across the country. Per Rentals.ca, average asking rents in Canada decreased 2.8% from a year ago to $2,127 in April, consistent with the decrease recorded in March and representing the seventh consecutive month of annual rent declines.

Despite the recent decline, rents are still 28.0% higher than the pandemic low reached four years ago.

Nature is healing. Let’s watch.

Steve Saretsky June 9th, 2025

Posted In: Steve Saretsky Blog

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