Canadian economy sheds jobs for second straight month

Canada’s economy lost 30,600 jobs in July, according to data from Statistics Canada on Friday. This marks the second consecutive month of employment losses for the country.

The data came in weaker than expected. The median estimate among economists tracked by Bloomberg was for a gain of 15,000 jobs last month and an unemployment rate of 5.0 percent.

The country’s unemployment rate remained steady at a historic low of 4.9 percent.

The wholesale and retail trade, health care and social assistance, and educational services sectors collectively saw a loss of 53,000 jobs. The losses were partially offset by the goods-producing sector which gained 23,000 jobs, the labor force survey revealed.

The decline in jobs was roughly the same in both part-time and full-time work, although employment fell the most among women aged 55 and over.

The overall participation rate fell by 0.2 percent to 64.7 percent in July, compared to the 0.4 percentage point drop in June.

The average hourly wages of employees rose 5.2 percent on a year-over-year basis, matching the pace set in June.

“This is a notoriously noisy survey, especially in the summer months, July and August. The numbers bounce around a lot. I think what’s important here is that the North American economies are slowing down,” Philip Cross, a senior fellow at the Macdonald-Laurier Institute and a former chief economic analyst of Statistics Canada, said in an interview Friday morning.

He also cautioned that Canada’s housing sector is vulnerable to the rising interest rate environment and could lag behind the US

“There are some pockets of resilience in the economy. The resource sector is one,” Cross said.

The Bank of Canada has attempted to rein in runway inflation with aggressive interest rate hikes. Friday’s jobs data will likely help inform the central bank’s next scheduled interest rate decision in September.

“While today’s figures muddied the waters further for policymakers, the Bank of Canada will likely focus on the historic low unemployment rate and still strong wage growth to justify another non-standard rate hike at its next meeting,” Andrew Grantham, a senior economist at CIBC Capital Markets wrote in a note to clients on Friday.

The Bank of Canada remains committed to reaching its target rate of two percent inflation.

“Evidence that the economy is slowing due to weakening demand, rather than supply constraints, will bring a pause in this rate hike cycle following the next hike,” Grantham said.

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