Canada’s economy shed a net 2,200 jobs in June after two months of gains, but wages jumped by the most in more than a year – a sign of strength analysts said ruled out the chances of the Bank of Canada cutting interest rates this week.
Statistics Canada said that the unemployment rate edged up at 5.5 per cent from a record low of 5.4 per cent in May, reflecting the fact that more people were looking for work. Analysts in a Reuters poll had predicted a gain of 10,000 jobs and an unemployment rate of 5.5 per cent.
The average hourly wages for permanent employees – a figure closely watched by the central bank – jumped by 3.6 per cent in June, the largest year-on-year gain since the 3.9 per cent increase seen in May 2018.
June saw the creation of 24,100 full-time jobs but this was canceled out by a loss of 26,200 part-time positions. The Canadian economy created a record 106,500 jobs in April and added another 27,700 in May. The announcement was the last in major economic statistics before the Bank of Canada’s next interest rate announcement this Wednesday.
The central bank has not raised rates since October, and market analysts believe it will stay on the sidelines even as expectations grow that the U.S. Federal Reserve will cut rates as early as the end of the month.
“It doesn’t change our view around the Bank of Canada,” Robert Both, Canadian macro strategist at TD Securities, told Reuters. “We still expect them to remain on hold for the next six months. But it is going to give them a little more confidence to push back against the market pricing for rate cuts.”
Derek Holt, Scotiabank’s vice president of capital markets economics, said the data were stronger than they looked and noted the healthy growth in wages. “The Bank of Canada will be encouraged,” he told Reuters by phone.
The Canadian dollar weakened to 1.3090 to the U.S. greenback, or 76.39 cents U.S.
The health services and social assistance sectors saw employment grow by 21,900 in June. Employment in manufacturing was down by a net 15,000 jobs across several provinces – the first notable decrease since July 2018.
(Reuters)
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