Canada's unemployment rate remained at a historic low of 4.9% in July and wage growth remained elevated even as the number of jobs dipped slightly, suggesting the central bank remains under pressure to deliver another big interest-rate hike.
The 30,600 decline in employment ran against market expectations for a gain of 15,000, and the steady jobless rate was better than forecasts it would rise a notch to 5%. While the July job loss adds to June’s 43,200 decline, employment remains 687,000 greater than a year earlier, Statistics Canada reported Friday. The jobless rate held steady in part due to a 27,000 decline in the labor force.
Average hourly wages for all employees, the measure tracked by the Bank of Canada, rose 5.2% from a year ago, the same reading as in June. Statistics Canada also said wages for permanent workers rose 5.4%, versus the prior 5.6%. Both readings are above the Bank of Canada's 2% inflation target.
Job-market strength is a key domestic argument against danger from any global recession. BOC Governor Tiff Macklem has said that while his goal is restoring stable prices he’s hopeful there can be a soft landing. Global bodies like the IMF say that path has narrowed as surging inflation requires strong central bank action and growth is hindered by the war in Ukraine, China’s tough lockdowns and slower U.S. consumer spending.
The BOC has said the economy is operating beyond full output. Last Friday’s GDP report included a flash Q2 estimate that annualized output rose around 4.5%, ahead of the central bank’s 4% estimate. Royal Bank has predicted a Canadian recession is coming next year.
July's job losses were led by wholesale and retail trade, which fell by 26,900, and healthcare and social assistance declined another 22,000.