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Canada Unexpectedly Lost Jobs in July on Schools; First Decline This Year
Canada unexpectedly lost jobs in July and the country’s unemployment rate increased because of a drop in full-time jobs at schools and in the finance industry. The currency and government bond yields declined.
Employment fell by 9,300 jobs in July, the first decline this year, following a 93,200 increase in June, Statistics Canada said today in Ottawa. The jobless rate rose to 8 percent, from 7.9 percent. Economists surveyed by Bloomberg predicted 12,500 new jobs and a jobless rate of 7.9 percent, according to the median of 22 estimates.
Canada’s economic growth has probably slowed this quarter to about half the pace in the first three months of the year when low mortgage rates and temporary tax credits sparked spending. The slowdown may prompt the central bank to reconsider the pace at which it raises interest rates.
“This is consistent with the idea that OK, we’re somewhat confident that the Bank of Canada is probably going to pause,” said David Watt, senior currency strategist at Royal Bank of Canada, the nation’s biggest bank.
Canada’s economy grew at a 6.1 percent annualized first- quarter pace. Growth is projected at 3 percent in the second quarter and 2.8 percent in the third quarter, according to the Bank of Canada. The economy “is recovering, although we aren’t out of the woods yet,” Finance Minister Jim Flaherty told reporters yesterday in Ottawa.
Raised Rates
The Bank of Canada raised its key interest rate for the second month in a row on July 20, to 0.75 percent, and Governor Mark Carney said two days later that “elevated” economic risks mean any further moves would be “weighed carefully.” The bank’s policy makers next meet on Sept. 8.
Canada’s dollar fell from almost the highest level in three months after the report. The currency declined 0.5 percent to C$1.0221 per U.S. dollar at 8:57 a.m. One Canadian dollar buys 97.8 U.S. cents.
The yield on the two-year Canadian government note, among the securities most sensitive to central bank interest rate moves, declined to 1.47 percent, from 1.52 percent yesterday.
Canada’s economy has created 393,700 jobs since July 2009, Statistics Canada said today.
Full-time employment decreased by 139,000 in July, Statistics Canada said, partly offset by a 129,700 increase in part-time jobs. Employment in educational services fell 65,300, and jobs in finance, insurance, real estate and leasing were down 29,800.
Jobs in public administration were up by 18,700.
Average hourly wages rose 2.2 percent in July from a year ago, up from an annual pace of 1.7 percent in June.
Payroll employment fell by 5,200 in July, and self- employment dropped 4,200, the agency said.
To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net.
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