- Employment declined 24k in July
- The unemployment rate ticked up to (a still low) 5.7%
- Wage growth jumped up to a new cycle-high 4.5%
The July employment dip was softer than market expectations – but is still not really surprising. Outsized growth in prior months has for some time looked out-of-step with other measures of economic growth like GDP. The employment numbers are also notoriously volatile, which is why Statistics Canada could still legitimately characterize the 24k drop in July as “little-changed.” The July count is still up a tough-to-sustain 353k from year-ago levels.
A rise in the typically more-stable unemployment rate to 5.7% from 5.5% in June is a bit more surprising, but increases over the last two months have still just reversed an unusually large 0.3 ppt dip to 5.4% in May. It is still down 0.2 ppts from a year ago and is still sitting around multi-decade lows. And wage growth – a missing ingredient among earlier indicators of labour market strength – jumped to a new cycle-high 4.5% year-over- year, extending earlier signs of improvement in Q2. Worries about the potential impact on Canada from escalating US-China trade tensions will persist. And we still fully expect employment growth to be softer over the second-half of this year than it was over the first. But details of the July report are still not really soft enough to change the narrative that Canadian labour markets still look pretty solid on balance.
