Statistics released yesterday, Friday, showed that the unemployment rate in Canada rose to its highest level in 29 months at 6.4%, highlighting that people may be losing their jobs amid the struggle of the labor market to accommodate rapid population growth.

The jobs report, which also showed that the unemployment rate among youth reached its highest level in nearly a decade excluding pandemic years, led financial markets to increase bets on a rate cut by the Bank of Canada this month to about 56% from 40% the previous day, according to Reuters.

Economists noted that the rising unemployment rate could be an indicator that Canada is nearing recession, as stated in a memo by the chief economist at BMO Capital Markets, that the unemployment rate has risen by about 1.4 percentage points since January of last year, and said: typically we do not witness a sustained deterioration except during periods of recession.

Statistics Canada stated that Canada lost a net 1,400 jobs in June, which contradicts analysts’ forecasts of an increase of 22,500 jobs, in further signs of weakening economic conditions.

Royce Mendes, the head of macroeconomic strategy at Desjardins Group, said that the sharp rise in the unemployment rate would lead many to question whether Canada has entered a recession.

He added that lowering interest rates is the only way to alleviate the blow from upcoming mortgage renewals and to maintain any hope for a soft landing, specifying that the Bank of Canada will cut interest rates by 25 basis points this month and make two additional cuts in the following three meetings.