Canada’s unemployment rate rose in June as 60K jobs added – National

Canada’s unemployment rate rose to 5.4 per cent in June even as the country’s employers kept hiring, according to Statistics Canada.

The agency said Friday Canada added 60,000 jobs amid a gain of 110,000 full-time positions last month. That marked the largest increase in employment since January.

But the unemployment rate rose from 5.2 per cent in May as more people were looking for work, StatCan said. Canada has seen surging population growth in recent months, including hitting the 40-million-population mark in June.

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Canada’s population just hit the 40-million milestone

Job gains were concentrated in wholesale and retail trade, manufacturing, health care and social assistance and transportation and warehousing.

Meanwhile, year-over-year wage growth slowed significantly last month, falling to 4.2 per cent compared with 5.1 per cent in May. Wage growth had been above the five per cent mark for much of 2023.

Canada’s unemployment rate now stands at its highest level since February 2022.

A separate jobs data release south of the border on Friday showed the unemployment rate in the United States ticked down to 3.6 per cent in June from 3.7 per cent the previous month. America’s employers pulled back on hiring but still delivered another month of solid gains last month, adding 209,000 jobs in a sign that the economy’s resilience is confounding the Federal Reserve’s drive to slow growth and inflation.

The June jobs report is the last major economic data release before the Bank of Canada announces its interest rate decision on Wednesday.

The Bank of Canada is hoping to see more softening in the labour market as it stays focused on bringing inflation down.

TD Bank senior economist Leslie Preston said in a note Friday that despite strength in the June headline jobs number, the three-month and six-month trends in employment show hiring is indeed slowing down, in keeping with expectations that Canada’s unemployment rate will hit 6.0 per cent by the end of the year.

CIBC senior economist Andrew Grantham also said in a note that the cooling in wage gains are among the “signs of a loosening” in Canada’s labour market, which has remained tight through much of 2023 despite headwinds on the economy and rising interest rates.

But those signs of slowing might not be enough to hold the Bank of Canada back from another interest rate hike next week, he said in a note to clients.

Preston agreed that wage growth likely hasn’t moderated enough for the central bank’s liking. TD Bank’s call is for another quarter-percentage-point hike next week, but if the Bank of Canada opts to hold, Preston said policymakers will keep a “hawkish” tone that favours another rate increase in September.

Nathan Janzen, RBC’s assistant chief economist, said in a note that he also felt the jobs report was “mixed.”

He said the Bank of Canada likely didn’t come off the sidelines from its rate tightening cycle for just one move when it surprised markets and economist with a 25-basis-point hike last month. Signs of resilience in Canada’s economy beyond the labour market will likely keep the central bank in rate-hike mode on Wednesday, Janzen argued.

“Economic growth data and ‘sticky’ core inflation readings since then haven’t been soft enough to derail those plans,” he wrote.

— with files from The Canadian Press and The Associated Press

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