2023-07-07 23:46:50
Canada’s labor market is showing signs of slowing as the jobless rate rises and wage growth slows, but given another strong job gain last month, forecasters still expect unemployment rates to rise. interest next week.
The economy added 60,000 jobs in June, boosted by gains in full-time work, Statistics Canada said Friday.
But as more Canadians looked for work and the population continued to grow, the unemployment rate soared to 5.4%, its highest level in a year.
In Quebec, the unemployment rate rose 0.4 points, to 4.4%, because more people were looking for work last month. Employment fell by 8,400, down 0.2% from the previous month.
“The reason the unemployment rate may rise alongside historically strong job growth is that population growth continues to set new records, including a monthly increase of 84,000 in June” in Canada, wrote Nathan Janzen, Royal Bank’s Deputy Chief Economist, in a note to clients.
Towards a rate hike?
June marks a second straight month of rising unemployment in the country, as economists watch for easing in the labor market amid high interest rates.
Meanwhile, employers’ appetite for hiring rebounded in June following the economy shed 17,000 jobs in May.
“Overall, the job growth we’re seeing puts this report in the positives column, but not to the point where it’s something we should be excited regarding,” said Brendon Bernard, senior economist for the Indeed hiring website.
Labor market gains were concentrated in wholesale and retail trade, manufacturing, health care and social assistance, and transportation and warehousing. Statistics Canada revealed that annual wage growth also slowed last month, coming in at 4.2%. This compares to a 5.1% annual gain in May.
The slack in the labor market is likely good news for the Bank of Canada, which is looking for indications that its aggressive rate hikes are helping to cool the economy, but forecasters still expect the central bank to raise its interest rate in its next decision on the subject on Wednesday.
“June labor market data is mixed, but it shouldn’t be enough to prevent the Bank of Canada from following through on a second straight 25 basis point interest rate hike in the next decision politics next week,” Janzen said.
The central bank opted to end its pause in rate hikes in June following a series of economic data revealed that interest rates were not high enough. The quarter-percentage-point hike took the central bank’s key interest rate to 4.75%, its highest level since 2001.
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