Canada’s unemployment rate rises to 6.4%

Canada’s labor market was virtually unchanged in June, with a net loss of 1,400 jobs. According to Statistics Canada, this pushed the unemployment rate up 0.2 percentage points to 6.4 percent. The data was weaker than expected.

ICYMI: The @BLS_gov #JobsReport for June showed continued low unemployment and job gains across a variety of industries. 📈 Here are some highlights. pic.twitter.com/WkxcUHIgYH

— U.S. Department of Labor (@USDOL) July 8, 2024

Forecasts had predicted a net gain of 22,500 jobs and an unemployment rate rise to 6.3 percent. Since April of last year, Canada’s unemployment rate has climbed 1.3 percentage points. Job growth has not kept pace with Canada’s population surge.

ICYMI: The economy added another 206,000 jobs in June. Employment continued to trend up in several industries. 📈 https://t.co/iFGR6uizeK #JobsReport pic.twitter.com/fxkD6SZvBH

— U.S. Department of Labor (@USDOL) July 7, 2024

There were 1.4 million unemployed people in June, an increase of 42,000 from the previous month. Excluding the COVID-19 pandemic years, unemployment was last at 6.4 percent in October 2017. Average hourly wage growth, closely watched by the Bank of Canada, picked up again in June.

"The Canadian job market isn’t exactly weakening. It’s just failing to keep up with the country’s breakneck population growth," says @StatCan_engEhre .
"The number of unemployed workers has exploded dramatically," says @StephenPunwasi
1/2 #cdnpoilhttps://t.co/2flsn7ZGwv pic.twitter.com/skjeFUwNx3

— DouglasTodd (@DouglasTodd) July 6, 2024

It rose 5.4 percent following an increase of 5.1 percent in May. “As a standalone result, the softening job market raises the odds of a Bank of Canada rate cut.

Unemployment rate climbs amid job losses

However, wages remain the very definition of sticky, which will give the Bank pause,” BMO chief economist Douglas Porter wrote in a note on Friday. The report is a key data point the Bank of Canada will consider ahead of its July 24 rate decision. Desjardins managing director and head of macro strategy Royce Mendes said in a research note that “it’s clear that the Bank of Canada should continue its rate-cutting cycle in July.” Lowering interest rates is the only way to soften the blow from upcoming mortgage renewals and keep any hope of a soft landing alive,” Mendes wrote. June’s labor decline included a loss of 3,400 full-time jobs, partially offset by an increase of 1,900 part-time jobs. The number of people working in transportation and warehousing dropped by 12,000. Public administration also saw a decrease of 8,800 jobs. However, gains were made in accommodations and food services, which added 17,000 jobs. Agriculture also increased by 12,000 jobs. The report also highlighted a significant decline in youth employment. The youth employment rate for those aged 15 to 24 has been on a “strong downward trend” since April 2024. It fell 4.4 percentage points to 54.8 percent in June. The youth unemployment rate hit 13.5 percent last month, the highest level since September 2014, excluding the pandemic years.