Surprise! Canada’s economy generated 83k new jobs in June (+0.4% month/month), much better than the consensus expectation for a flat reading. However, the gains were driven by a 70K gain in part-time positions.
The unemployment rate fell one tick to 6.9% after trending upwards for three months. Despite the labour force continuing to grow faster than we had expected (+0.3% m/m), employment gains outpaced it.
Looking by sector, wholesale and retail trade led the way, gaining 34k jobs (+1.1% m/m), followed by gains in health care and social assistance (17k, +0.6% m/m). Notably, manufacturing gained 10.5k jobs, although, employment there is still down 1.4% versus a year ago. Most other industries gained jobs, with agriculture (-12.5k, -2.6% m/m), and “other” services standing out with losses (-8.5k, -1.1% m/m).
Wage growth cooled in June. Average hourly wages rose 3.2% versus a year ago, down from 3.4% in May.
Key Implications
Canada’s labour market bucked its weakening trend in June. The unemployment rate fell, and most sectors saw job gains. However, one month isn’t going to turn the page on what is a much cooler labour market relative to a year ago. With President Trump making new threats for a higher 35% tariff rate on Canadian goods just last night, certainty for many Canadian businesses doesn’t appear to be improving any time soon.
The Bank of Canada gets its next kick at the can on July 30th . Today’s jobs report is another tick in the resilience tally, but next Tuesday’s June inflation report is likely to be the bigger factor in the Bank’s deliberations, given recent hotter-than-expected inflation readings. We think a strong argument for further rate cuts remains in Canada, we’ll soon see if the BoC agrees.
