The Canadian labour market shed 6.4k positions in July, with full-time employment up 1.7k and part-time employment down 8.1k.
The unemployment rate rose 0.1 percentage points to 5.5% and the participation rate dropped 0.1 percentage point to 65.6%.
Employment fell in construction (-45k), public administration (-17k), and information, culture and recreation (-16k). Gains were seen in health care and social assistance (+25k), educational services (+19k), and finance, insurance, real estate, rental and leasing (+15).
Lastly, total hours worked were up 0.1% month-on-month and wages were up 5.0% year-on-year (vs 4.2% in June).
Key Implications
Canada’s labour market continues to loosen. With the population/labour force booming faster than the jobs market can keep up, the unemployment rate has risen to 5.5% from 5.0% in just three months. Over 2023, the number of unemployed people has increased in 6 of 7 months, causing the total number of unemployed to rise by 123k. This loosening follows a +10% drop in the number of job vacancies.
The Bank of Canada isn’t likely to change its hawkish tone just yet. While odds of another rate hike dropped following this report, the BoC will need to see more of the same before it can feel like its job is done. Today’s report is in line with our expectation for a rising unemployment rate and a further slowing in economic momentum through the rest of this year.
