Yahoo Finance Canada's job market stalls in June, as unemployment rate climbs to 6.4%
Canada's labour market stalled in June, losing a net 1,400 jobs, pushing the unemployment rate up 0.2 percentage points to 6.4 per cent, Statistics Canada said on Friday.
The data was weaker than expected, as analysts polled by Reuters had forecast a net gain of 22,500 and the unemployment rate to rise to 6.3 per cent. Markets increased bets of a Bank of Canada rate cut in July slightly, from below 50 per cent before the labour report was released, to around 55 per cent.
Canada's unemployment rate has climbed 1.3 percentage points since April of last year, as job growth has failed to keep up with Canada's population surge. There were 1.4 million unemployed people in June, the federal data agency says, an increase of 42,000 from the previous month. The unemployment rate is now the highest since the 6.5 per cent level hit in January 2022. Excluding the COVID-19 pandemic years, unemployment was last 6.4 per cent in October 2017.
Average hourly wage growth, a figure closely watched by the Bank of Canada, picked up again in June, rising 5.4 per cent following an increase of 5.1 per cent in May.
"As a standalone result, the softening job market raises the odds of a Bank of Canada rate cut. However, wages remain the very definition of sticky, which will give the Bank pause," BMO chief economist Douglas Porter wrote in a note on Friday.
"We suspect that the June CPI will need to be exceptionally tame for the BoC to move at this month's decision, but the underlying softness in the job market sets the stage for additional rate cuts later this year."
The labour report is one of the key data points the Bank of Canada will be considering ahead of its July 24 rate decision. The Bank of Canada cut interest rates for the first time in more than four years in June, bringing its benchmark rate to 4.75 per cent, and left the door open to further cuts if inflation continues to ease.
Desjardins managing director and head of macro strategy Royce Mendes said in a research note Friday that "it's clear that the Bank of Canada should continue its rate-cutting cycle in July."
"Lowering interest rates is the only way to soften the blow from upcoming mortgage renewals and keep any hope of a soft landing alive," Mendes wrote.
"The market has moved to price in more rate cuts after the release, but we expect that there’s still further to go on that front, assuming that the upcoming inflation reading looks cooler than the last one."
June's labour decline included a loss of 3,400 full-time jobs, partially offset by an increase of 1,900 part-time jobs. The data agency says the number of people working in transportation and warehousing dropped (-12,000), as well as in public administration (-8,800). Jobs were added in accommodations and food services (+17,000), and agriculture (+12,000).
Statistics Canada says youth employment rate (for those between the ages of 15 and 24) has been on "a strong downward trend" since April 2024, falling 4.4 percentage points to 54.8 per cent in June. The youth unemployment rate hit 13.5 per cent last month, the highest level since September 2014, excluding the pandemic years.
Canada’s labour market added a net 26,700 jobs in May while the unemployment rate ticked up to 6.2 per cent. May's increase in jobs was due to more part-time work.
With files from Reuters.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
