Canadian employers unexpectedly cut 30,400 jobs in July, and the unemployment rate increased, as the country’s retailers and wholesalers let go part-time workers.
The job losses, all in part-time work, were the most since October 2011, Statistics Canada said today from Ottawa. The jobless rate rose to 7.3 percent from 7.2 percent in June. Economists projected the unemployment rate would remain unchanged at 7.2 percent and that employment would increase by 6,000, according to the median in a Bloomberg News survey of 25 economists.
Investors pared bets Bank of Canada Governor Mark Carney will raise borrowing costs with odds of an increase by April falling to 33 percent at 10:53 a.m. in Toronto, according to overnight index swaps. That’s down from 45 percent just before today’s release. Yields of Canada’s two-year government bonds declined to 1.13 percent, from 1.16 percent late yesterday.
“Governor Carney wasn’t particularly close to raising interest rates any time soon and the trend over the last few months towards softer employment growth is consistent with him wanting to wait quite a while before moving on that threat,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a telephone interview from Toronto.
“We certainly don’t see any prospect of a rate hike from the Bank of Canada this year and potentially right through next year if the global economy doesn’t significantly accelerate,” Shenfeld said.
The July drop means Canada’s economy has lost a net 15,400 jobs since the start of May, the worst three-month performance since the end of last year.
Carney has kept his key lending rate at 1 percent since September 2010, the longest pause since the 1950s, and in July cut his economic growth forecast citing global weakness and the weakest export recovery since World War II.
In an interview with British Broadcasting Corp. broadcast yesterday, Carney said higher borrowing costs may be required because Canada is in a “very different place” than economies like the U.K. that are in crisis.
Canada’s dollar, nicknamed the loonie, fell 0.11 percent to 99.22 cents per U.S. dollar in Toronto. One Canadian dollar buys $1.0076.
Services-producing sectors led declines in today’s report with wholesale and retail businesses losing 30,000 jobs. Professional, scientific and technical services employment fell 21,600 workers in July while public administration declined by 17,000. Goods producers reduced employment by 13,200, with employment in natural resources declining 8,900 and manufacturing losing 18,400.
Full-time jobs increased by 21,300 in July, Statistics Canada said. Part-time employment fell by 51,600 positions. Quebec led declines, with the province cutting 28,700 workers, all in part-time employment.
The number of payroll employees declined by 15,600 and the self-employed fell by 14,800 workers.
Average hourly wages of permanent employees rose 3.9 percent in July from a year earlier, faster than June’s 3.3 percent pace and the highest since April 2009.