The number of people receiving regular employment insurance benefits dropped in July for the first time in 11 months.

In July, 787,700 people received regular employment insurance benefits, down by 31,500, or 3.8 per cent, Statistics Canada said Monday.

Labour economist Erin Weir says fewer than half of Canada's 1.6 million officially unemployed are receiving employment benefits. (Marcio Jose Sanchez/Associated Press)

There were 274,700 initial and renewal claims received in July, down by 25,500, or 8.5 per cent, following a similar decrease the previous month.

Economists saw the decline in new entrants to the EI rolls as the best signal of progress from the harsh jobs market of late last fall and early 2009.

Fewer "people are entering the system, so this is a good news story," said Millan Mulraine of TD Bank.

Labour economist Erin Weir was also encouraged by the decline in new entrants, but cautioned that the fall-off is likely an indication that workers have exhausted their entitlements — rather than that they have found new jobs.

"This development underscores the importance of enacting the proposed benefit extension for some long-tenured workers, but also the need for broader EI reform to improve benefits for all unemployed workers," he said.

Changes proposed

Weir, an economist with the United Steelworkers union, pointed out that fewer than half of Canada's 1.6 million officially unemployed are receiving employment benefits.

The Conservative government, backed by some opposition parties, has proposed changes that would allow Canadians with lengthy and established work records to receive benefits for a longer period.

Despite the decline in July, the number of regular beneficiaries was still 287,400, or 57.4 per cent above the level in October 2008.

The largest declines occurred in Ontario, Quebec and Alberta. The declines in those provinces were the first since the labour market started to deteriorate in the fall of 2008.

EI rolls shrank by 5.9 per cent in Ontario, by 5.3 per cent in Quebec and 4.4 per cent in Alberta.

The only province to record a notable increase was Newfoundland and Labrador, where 47,700 people received benefits in July, up by 2,900, or 6.5 per cent, from June.

Male bias

The number of men younger than 25 receiving regular benefits more than doubled (up by 122 per cent) over 12 months, reaching 52,000 in July.

Over the same period, the number of male beneficiaries aged 25 to 54 increased 86.4 per cent to 302,900, while it increased 66.1 per cent to 76,000 for men aged 55 and older.

In the last 12 months, the rate of increase in the number of female regular beneficiaries was lower for all age groups.

The number of male beneficiaries increased 85.9 per cent during the year-long period, more than twice the growth rate of 32.5 per cent for women. Over the period, overall employment declined by 238,000 among men, nearly four times the drop of 64,000 among women.

With files from The Canadian Press