Canadian employment unexpectedly fell by 43,200 in June as people left the labor force, a shift that lowered the jobless rate to a fresh record low of 4.9%, the government statistics office said Friday.
The job decline compares with the economist consensus for a gain of 25,000, though some had warned the overheated labor market would face a reversal as companies struggled to keep staff. The fall in the unemployment rate was also unexpected, with economists predicting it would remain 5.1%, which was already the lowest in records back to 1976.
More important for a Bank of Canada weighing a 75 basis point rate increase on Wednesday, wage gains kept climbing beyond the 2% inflation target. Average hourly wages for all employees, the measure tracked by policy makers, rose 5.2% in June from a year ago, up from 3.9% in May and April's 3.3% pace. Statistics Canada also said wages for permanent workers rose 5.6%.
Hours worked, sometimes viewed as a proxy for GDP, rose 1.3%, the first gain since March.
Governor Tiff Macklem has said curbing inflation is his number one goal and policymakers can be forceful if needed, and reaching a soft landing is made easier by a very strong job market.