The Canadian labour market bounced back an impressive 60k positions in June, more than recouping May’s losses. Full-time employment was up 110K while part-time employment fell 50k.
The unemployment rate rose another 0.2 percentage points to 5.4%, as strength in labour force growth (+114k) outstripped job gains. The participation rate increased two tenths of a percentage point to 65.7%.
Employment gains by industry were not particularly widespread. Industries with the biggest gains in percentage terms were manufacturing (+27.3k), wholesale and retail trade (+32.6k), transportation and warehousing (+10.4k), health care and social assistance (+20.7k), natural resources (3k), and finance insurance and real estate (9.8k). Losses were seen in construction (-13.5k), education (-14k), business, building and other support services (-2.4k) and in professional, scientific and technical services (-6.5k).
Lastly, total hours worked were virtually unchanged in June, and wages were up 4.2% year-on-year (vs 5.1% in May).
Key Implications
A June rebound in hiring keeps Canada’s job market resilience intact. The rise in the unemployment rate over the past two months is coming against a backdrop of job gains, and full-time positions no less, but the labour force growth has been even stronger. Month-to-month swings in job gains are volatile in Canada, but looking at three and six-month trends in hiring, job gains have slowed, in line with our forecast for the unemployment rate to rise towards 6% by the end of this year.
This is the last key piece of data before the Bank of Canada’s interest rate decision next Wednesday. We expect the only modest cooling in inflation in wages will tip the Bank in favour of another 25 basis point hike. However, if they opt to skip a meeting, their tone is likely to remain hawkish, and a September hike would remain on the table.
