- Canada’s economy added 18k jobs in June (+0.1% m/m), broadly in line with consensus expectations for a 10k gain. Employment gains were concentrated in the private-sector, while public-sector employment declined on the month.
- The unemployment rate eased to 6.5% from 6.6%, as labour supply remained stable, with the labour force participation rate holding at 65%.
- Job gains were led by accommodation and food services (+15k), while manufacturing lost 17k jobs. Manufacturing employment has fallen by 61k since January 2025 (3.2%), when tariff uncertainty began.
- Average hourly wages rose 3.3% year-on-year in June, up from a 3.0% pace in May.
Key Implications
- This report landed broadly in line with market expectations. Following May’s exceptionally strong gain, hiring moderated in June, and the unemployment rate returned to where it began the year. Pulling back the lens, Canada’s labour market has made modest, but positive progress over the past year.
- Manufacturing, where job losses continue to mount, remains a poster child of the uncertainty hanging over the Canadian economy. It is a reminder that the economy continues to operate below capacity, with downside risks concentrated in trade-exposed sectors. This should continue to provide a disinflationary offset. With this backdrop we expect the Bank of Canada to remain on the sidelines and keep its policy rate unchanged at 2.25% at next week’s meeting.
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