Canada’s monthly jobs report showed that the economy added a healthy gain of 31,800 jobs in the month of June. But this wasn’t enough to keep the unemployment rate steady. Canada’s unemployment rate jumped two percentage points to 6.0%. In May, the unemployment rate held steady at 5.8%.
This was the first time that Canada’s unemployment rate increased to reach the 6.0% threshold since October 2017. Back then, the unemployment rate was at 6.2%.
Despite adding bigger than expected jobs, the unemployment rate ticked higher. This was due to 76,000 new people entering the work force, looking for jobs.
Wage growth, which has been an important component for policy makers to decide on interest rates was strong. Wage growth was recorded at 3.6%. But this was still low compared to the high of 3.9% registered in the month of May.
The jobs report comes just a week before the Bank of Canada meets for its monetary policy decision. Expectations for a rate hike remain divided with economists noting that despite a stronger economy, significant headwinds remain. The BoC’s interest rate stands at 1.25% with the markets assigning a 50% probability for a rate hike.
The trade disputes with the United States and the overall global trade uncertainty remain a key factor when officials deliberate on whether to hike rates or not this week.
The overall employment in Canada was seen to be 1.2% higher in June. This came following 214,900 jobs that were created so far. Most of the gains came from new full time positions which was seen as a positive for the economy
Offsetting the gains was the disappointing performance in the services sector. Details from Statistics Canada showed that the economy added 9,100 full time jobs in the month of June while part time positions increased 22,700. The public sector jobs performed better, adding 11,800 jobs during the month. Private sector disappointed by losing 2000 jobs during the period.
The goods producing sector added a healthy gain of 46,600 jobs during the month. This came on higher demand from the construction and manufacturing sectors including natural resources.
The services sector was the weakest, losing 14,700 jobs for the reported period. This came on the back of big declines in accommodation and food services including both wholesale and trade sectors.
On a regional basis, the city of Ontario was seen leading the way adding 34,900 jobs during the period. This was about a 0.5% increase in job creation compared to the month before. The region of Saskatchewan also added jobs. The region posted the biggest gain in six years by adding 8,300 jobs. This represented about 1.5% growth overall in the region.
The youth unemployment rate was seen rising from 11.1% in May to 11.7% in the month of June.
The unemployment data was seen to be strong overall and could give further impetus for officials to argue for a rate hike.
In a separate report released last Friday, Statistics Canada said that the merchandise trade deficit with the rest of the world widened to $2.8 billion. The international trade deficit was seen at $1.9 billion in April.
Imports expanded at a pace of 1.7% while exports fell 0.1% during the month of May. Exports decline due to weaker trade on automobiles as well as mineral resources. Meanwhile, imports increase on new orders of aircrafts and other energy products.
Import orders for aircrafts increased $937 million. The trade report showed that Canada posted a trade surplus of $3.3 billion May. This was a slight decline from April’s report showing a $3.7 billion print.
The Canadian dollar was seen rising after the release of the data. The Canadian dollar closed on Friday at a three week high.