Canada’s unemployment rate fell slightly to 6.9% in June as the wholesale and retail trade sectors as well as manufacturing, healthcare and social assistance all saw surprise job growth, data showed on Friday.
The economy added 83,100 new jobs in June, the first net increase since January, Statistics Canada said. Most of the employment growth was in part-time work.
Analysts polled by Reuters had estimated the unemployment rate would tick up to 7.1% from 7% in May, with no job additions. The jobs report usually has a standard error of around 32,000 between two consecutive months.
Friday’s release was the final jobs report before the Bank of Canada’s monetary policy decision on July 30, and better-than-expected unemployment and job addition numbers are likely to tilt the bank towards another hold in its policy rate.
June inflation data is due out next week.
Money market bets for a rate cut this month shrank to below 20% following the labor force survey.
On Thursday, rate cut bets were at 30% after U.S. President Donald Trump said he would impose 35% tariffs on Canadian imports from Aug. 1, up from 25% previously threatened.
“While the unemployment rate is still elevated, the strength in other measures in this report clearly diminishes the odds of a BoC cut in July,” Katherine Judge, economist at CIBC Capital Markets wrote in a note.
The Canadian dollar was trading down 0.12% to 1.3671 to the U.S. dollar, or 73.15 U.S. cents. Bond yields on the two-year government bonds were up 1.9 basis points to 2.715%.
While the number of unemployed Canadians in June changed only slightly from May, it was up 9% to 128,000 on a year-over-year basis. And more than one in five unemployed people had been searching for work for 27 weeks or more in June, an sharp increase from a year ago.
Statistics Canada said the layoff rate in June did not show any major uptick and remained low at 0.5% relative to historical averages barring recessionary periods.
Tariff-exposed sectors such as transportation and manufacturing had been showing signs of strain for the three months through May.
The employment in transportation dropped by 3,400 people in June while manufacturing posted a jump of 10,500, StatsCan said.
The biggest increase in employment was a 33,600 jump seen in wholesale and retail trade. Healthcare and social assistance saw an increase of 16,700 people while the agriculture sector shed 6,000 employees in June.
The participation rate – the portion of the population over the age of 15 that is economically active – was at 65.4% in June, up from 65.3% in May.
The average hourly wage of permanent employees – a gauge closely tracked by the BoC to ascertain inflationary trends – grew by 3.2% to C$37.22.
(Reporting by Promit Mukherjee; Editing by Dale Smith, Chizu Nomiyama and Joe Bavier)
