What caused London’s jobless rate to jump significantly to 7%?

London’s labor market ended 2024 with mixed results as the region’s jobless rate rose to levels not seen in years and the looming threat of US tariffs added uncertainty to the year ahead.

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The London region, which also includes Strathroy, St. Thomas, and portions of Middlesex and Elgin counties, added 400 jobs in December, while its unemployment rate rose to seven per hundred last month, Statistics Canada reported Friday. That the highest non-pandemic level since August 2016 (7.3 per cent).

December’s big jump from November’s 6.5 per cent was largely the result of more people looking for work as the population grows in the London region.

According to Statistics Canada figures, for instance, the region’s workforce – the number of people working and looking for work – grew by about 2,300 people last month, almost six times the number of new jobs created in December. In total, 313,500 were employed last month, virtually unchanged from December of 2023, while the labor workforce grew by about 1.5 per cent.

“It’s a bit concerning,” Pedro Antunes, chief economist with the Conference Board of Canada, an economic think tank, said of the jobless rate’s jump. “What London is facing is something that much of Canada has been facing: We’ve really had an open door policy around immigration. . . that saw essentially population growth more than double in Canada. . . while at the same time, the Bank of Canada has been applying the brakes on the economy very hard with high interest rates.

“So, what’s happened is the job market has finally started to stall.”

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Audra Bowlus, a Western University economics professor, said December is a difficult month to analyze given many people, especially young adults, jump back into the labor market looking for seasonal work during the busy holiday shopping season. And some industries, such as the construction sector, also lay employees off as work slows down over the holiday period. Both trends can affect the jobless rate.

But Bowlus also said the fact London’s population is growing will inevitably “crowd out” some of the people looking for work, meaning it could take them longer to land a position, pushing the region’s jobless rate higher.

“I’d be slightly more concerned. . . if we were just shuffling people out of employment into unemployment,” she said. “That’s definitely not what we want to see happen (but) if we’re adding new people and it’s taking them time to integrate into the labor market, it’s not as concerning.”

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At seven per cent, London’s jobless rate sat above Canada’s 6.7 per cent but still below Ontario’s 7.5 per cent.

Given that Statistics Canada uses a three-month moving average for cities and metropolitan areas, December figures bring London’s labor market performance closer to the provincial trends. Ontario’s jobless rate rose in 2024 amid tough economic conditions.

Key among them is higher interest rates, meant to bring inflation down, and which the Bank of Canada began cutting only in the second half of last year. The central bank’s benchmark rate currently sits at 3.25 per cent.

The expected continuation of interest rate cuts, with Canada’s central bank’s next rate announcement coming on Jan. 29, had many economists projecting 2025 could be a rebound year for the Canadian economy.

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In London’s case, the Conference Board of Canada had the local economy growing at a pace of 2.1 per cent, up from 2024’s 1.7 per cent, before averaging 2.6 per cent between 2026 and 2028.

Those figures would go out the window if President-elect Donald Trump moves ahead with threats of imposing 25 per cent tariffs on all Canadian products entering the US

Antunes said the board’s position is that Trump’s tariff threats will not materialize given the tightly integrated economies between the two countries and the pain American consumers would also feel from a trade war. But if they were to be implemented, they would be “game changers,” Antunes said.

“One thing I would say about these kinds of threats is that fear of not having access to the US market is enough just to change investment behavior,” he said. “This is so big that it’s outside of the kind of range of what’s kind of normal (economic) movements.”

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London-area jobless rate, over the past year

• December 2023: 5.5 per cent
• January 2024: 5.7 per cent
• February 2024: 5.9 per cent
• March 2024: 6.4 per cent
• April 2024: 6.4 per cent
• May 2024: 6.3 per cent
• June 2024: 6.2 per cent
• July 2024: 6.5 per cent
• August 2024: 6.5 per cent
• September 2024: 6.4 per cent
• October 2024: 6.4 per cent
• November 2024: 6.5 per cent
• December 2024: 7 percent

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