MNI: Canada Sheds Jobs In June And Wage Gains Quicken To 5.4%

Canada's unemployment rate hit the highest since 2017 outside of the pandemic in June while wage growth accelerated further past the 5% mark, keeping some mixed signals in place as the central bank weighs cutting interest rates a second time later this month. 

Employment declined by 1,400 in Statistics Canada's report Friday from Ottawa and the unemployment rate rose to 6.4% from 6.2%. Both figures were weaker than the market consensus for 20,000 new jobs and a 6.3% unemployment rate. Average hourly wage growth quickened to 5.4% from 5.1% for the fastest pace since December.  

Apart from the wage gains the labor market is showing the slack that led Governor Tiff Macklem to cut interest rates from the highest since 2001 at the last meeting and say more cuts will be justified if consumer price inflation slows as expected into next year. Officials have also said that while big wage gains are at odds with weak productivity growth over the long run, their view is that a broad array of indicators suggest wage pressures are abating.

StatsCan reported the unemployment rate has climbed 1.3 percentage points since April of last year and record immigration continues to swell the labor force. Long-term unemployment has also climbed 4 percentage points to 18% over the last year. Hours worked, which many economists use as a proxy for GDP, fell 0.4% on the month and are up just 1.1% from a year ago. 

The Bank of Canada's next rate meeting is July 24 and there is another inflation report before then. Headline inflation quickened to 2.9% in the last report, though it's held within the Bank's 1% to 3% target band for several months now. 

The job decline is the first since March, though well within the survey's margin of error. Over the last year the labor force has grown 2.8% and employment by 1.7%. Friday's report showed particular weakness in student employment.