OTTAWA: Canada’s economy shed a net 2,800 jobs in July as gains in full-time work were offset by losses in part-time jobs, while the unemployment rate remained at a 30-month high of 6.4%, data showed.
Analysts polled by Reuters had forecast a net gain of 22,500 jobs and the unemployment rate to rise to 6.5% from June’s 6.4%. An increase in the unemployment rate was expected due to rapid population growth, which the labor market was unable to absorb.
The figures came after the unemployment rate rose last week in the US, Canada’s biggest trading partner, where a three-year high unemployment rate rattled markets and raised fears of a recession.
Financial markets cut US interest rates by nearly 50 basis points and stocks fell along with bond yields.
In Canada, money markets saw another cut of 25 basis points at the Bank of Canada’s next rate announcement on September 4, with almost three cuts before the end of the year.
Economists saw Friday’s jobs report as having minimal impact on the trajectory of rate cuts in Canada as numbers continued to point to a weakening economy.
After announcing a second consecutive cut in its benchmark rate last month, the BoC noted that economic growth had been slower than population growth, leading to an oversupply in the economy and slack in the labor market.
The unemployment rate, the highest since 6.5% in January 2022, is on an upward trend, rising 0.7% percentage point since January.
Canada’s labor force participation rate also fell to a 26-year low of 65% in July, excluding a pandemic year, largely reflecting the cohort of people not looking for work.
The Canadian dollar extended slightly, losing 0.12% to 1.3744 against the US dollar, or 72.76 US cents. Yields on two-year Canadian government bonds fell 2.5 basis points to 3.451%.
Growth in average hourly wages of permanent employees slowed to an annual pace of 5.2% from June’s 5.6%, Statistics Canada data showed. The rate of wage growth is closely watched by the Bank of Canada (BoC) for its effect on inflation.
Employment in goods-producing sectors increased by a net 12,000 jobs, led by construction and utilities, while the services sector lost a net 14,800 jobs, mainly in wholesale and retail trade and some finance-related jobs.
