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Canada loses a net 1,400 jobs in June, jobless rate rises to 6.4%

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(Reuters) -Canada's economy lost a net 1,400 jobs in June, entirely in full-time work, and the jobless rate climbed to 6.4%, Statistics Canada data showed on Friday.

Analysts had expected a 22,500 gain and for the unemployment rate to rise to 6.3% from 6.2% in May.

Market reaction: CAD/

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COMMENTARY

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST AT CORPAY

"Hopes for a rate cut in July are rising, with Bank of Canada officials looking more likely to favor easing policy in back-to-back meetings. We think events over the coming weeks could help to calibrate expectations further - the Bank's survey data, out on the 15th, could prove enormously important in determining how the Monetary Policy Report portrays underlying growth - but on the labor market's current trajectory, market pricing should be assigning better-than-even odds to a summer move, with a cut by September fully priced in."

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DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS

"The unemployment rate is not (at a) concerning level but it is steadily marching higher and it does highlight that the job market has softened notably over the past year. The softening of the job market does suggest that inflation will moderate further. Wage (growth) has come in higher than expected, so it is a source of frustration for the Bank of Canada that we have this persistent softening in the job market but it is not showing up in wages and it will take time.

"We have been calling for September rate cut ... they need a good inflation number in next CPI (report) to cut in July."

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

"While wage growth accelerated to 5.6% for permanent workers, this was not entirely unexpected given base effects from a year ago, and we expect this measure of wages to decelerate in the second half of the year.

"While core measures of inflation accelerated last month, the continued loosening of labor market conditions should give the Bank of Canada comfort that inflation will converge to its 2% target over time. We maintain our forecast for a second 25 basis point cut at the next meeting later this month, although upcoming CPI data remain important to that call."

ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES

"What this really speaks to is the notion that the Canadian economy continues to run (at a) below-trend pace. We continue to see slack built into the labor market. For that reason, we are not too concerned about the acceleration in wage growth. And in our mind it just reinforces the case for the Bank of Canada to continue to ease through 2024."

SIMON HARVEY, FX MARKET ANALYST FOR MONEX EUROPE AND MONEX CANADA

"Not only did the economy fail to add jobs on aggregate, but the details of the report were also soft ... alongside a reduction in average hours worked, today's labor market report presents a compelling case for the Bank of Canada to embark on a back-to-back cut this month conditional on core inflation pressures snapping back in June, as we expect."

(Reporting by Divya Rajagopal and Nivedita Balu in Toronto, editing by David Ljunggren)