Canada unexpectedly sheds 2,800 jobs in July; jobless rate stays at 6.4%
2024.08.09 08:47
OTTAWA (Reuters) – Canada’s economy unexpectedly shed a net 2,800 jobs in July, as gains in full-time work were offset by part-time job losses, while the unemployment rate remained at 30-month high of 6.4%, data showed on Friday.
Analysts polled by Reuters had forecast a net gain of 22,500 jobs and the unemployment rate to rise to 6.5% from 6.4% in June.
The average hourly wage growth of permanent employees slowed to an annual rate of 5.2% from 5.6% in June, Statistics Canada data showed. The pay growth rate – closely tracked by the Bank of Canada (BoC) because of its effect on inflation – went back to the 5.2% level in May after the spike in June.
July was the second consecutive month of job losses and add to signs of easing in Canada’s labor market, which would support the case for the central bank to lower interest rates again at its next announcement in September. The unemployment rate, highest since 6.5% in January 2022, has been on an upward trend and risen 0.7% percentage points since January.
The participation rate of Canada’s labor force also declined to a 26-year low of 65% in July, largely reflecting declines among young men, and young and core-aged women. In Statscan’s labor force survey, 12% of youth aged 15 to 24 said they wanted to work but did not search for jobs, keeping them out of the count for participating population.
Citing progress towards achieving its 2% inflation target, the bank has lowered its key overnight rate in as many months and indicated it was now increasingly concerned about the chances of weaker-than-expected growth.
Ahead of its last rate cut announcement on July 24, the bank noted that economic growth had been slower than population growth, leading to an excess supply in the economy and slack in the labor market.
Money markets have priced in another 25 basis point cut at the bank’s next rate announcement on September 4, and some even see a slim chance of 50 basis point cut.
Friday’s data follows a dismal jobs report last week from the United States, which ignited worries about Canada’s biggest trading partner slipping into a recession.
The job losses in July were entirely in part-time work, which shed 64,400 positions and more-than offset a gain of 61,600 full-time jobs – highest since February.
Employment in goods-producing sector increased by a net 12,000 jobs, led by construction and utilities, while services sector lost a net 14,800 jobs, mostly in wholesale and retail trade and in some finance-related jobs.
