Royal Bank of Canada economists Nathan Janzen and Claire Fan say they expect Canada’s labour market should soon be reaching its low point. (Photo by: Education Images/Universal Images Group via Getty Images) · Education Images via Getty Images
Canada’s labour market defied expectations in June, adding a net 83,100 jobs while the unemployment rate dropped to 6.9 per cent, according to Statistics Canada data released on Friday.
The figures make a Bank of Canada (BoC) interest rate cut less likely, economists say, and will likely move the focus to upcoming inflation data.
Financial industry experts had expected the job market to stay essentially flat last month, forecasting a net loss of 3,000 jobs, according to consensus estimates published by the Bank of Montreal. Expectations were for the unemployment rate to increase 0.1 percentage point to 7.1 per cent.
The results are “not on the same planet as the consensus call for a flat reading,” writes BMO economist Benjamin Reitzes, and the data are “materially better than expected” even though part-time positions account for most of the gains.
“Barring a sharp decline in underlying inflation in next week’s June CPI report (which looks unlikely), the strength in today’s jobs data and the recently heightened uncertainty on the trade front likely will keep the BoC on the sidelines when it meets later this month,” Reitzes said, referring to Statistics Canada’s consumer price index update on July 15.
CIBC economist Katherine Judge offered a similar view following the release, noting that the numbers show the “resilience” of Canada’s job market.
“While the unemployment rate is still elevated, the strength in other measures in this report clearly diminishes the odds of a BoC cut” at its July 30 interest rate announcement, she says.
Friday’s data come in the shadow of renewed volatility in the Canada-U.S. trade relationship, after U.S. President Donald Trump threatened new tariffs late Thursday. The data also follow stagnant job numbers for May, with 8,800 jobs gained that month. The unemployment rate rose 0.1 percentage point to seven per cent in May.
We’ve seen a two-track Canadian labour market in recent years: those comfortably employed have enjoyed low layoffs and wage growth, but job seekers across a wide variety of circumstances are struggling.Brendon Bernard, senior economist at Indeed Canada
The June numbers come “in stark contrast to forecasts looking for a rise in the jobless rate,” notes Desjardins Group economist Royce Mendes, but the still-high unemployment rate means “today’s labour market data won’t be the swing factor” for the BoC.
“Next week’s CPI release will play a much more important role in determining whether central bankers resume monetary easing later this month,” Mendes wrote.
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