Canadian employment unexpectedly fell in July on fewer jobs in government and for youths, and wage growth declined to its slowest since 2011.
Employment fell by 39,400 last month, while the jobless rate rose to 7.2 percent from 7.1 percent, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News projected a 10,000 job gain and an unchanged jobless rate, according to the median forecasts in surveys with 23 responses.
Canada’s job gains have slowed so far this year, with the average monthly gain of 6,000. That’s down from the 27,820 average recorded in the second half of last year. The job report adds to other evidence of an inconsistent expansion, including a record string of 18 monthly trade deficits, an economy that grew by a less than expected 0.2 percent in May and inflation holding below the central bank’s 2 percent target for more than a year.
“Obviously a disappointing release on the Canadian jobs front,” said Camilla Sutton, head of currency strategy at Scotiabank in Toronto. “It highlights some of the fundamentals in the economy, that things are very moderate and there is a lack of confidence.”
Canada’s currency depreciated on the data, weakening to C$1.0347 per U.S. dollar at 9:21 a.m. in Toronto, from as high as C$1.0289 immediately before the report. One Canadian dollar buys 96.64 U.S. cents. Bonds rose, driving the benchmark 10-year yield lower by two basis points to 2.48 percent.
Employment for youths between ages of 15 and 24 fell by 45,600, while public-sector employment declined by 74,000. Among industries, the biggest decliners were in health care and public administration. The construction industry, which has been among the strongest sectors this year posting growth of 5.3 percent through June, lost 6,100 jobs in July.
The jobs figures are unlikely to alter the Bank of Canada’s outlook, said Mark Chandler, head of fixed income strategy at RBC Capital Markets in Toronto. While the headline employment number was worse than expected, private-sector job growth was “roughly flat,” he said in a telephone interview.
“He was pretty cautious anyway in his first go-around,” Chandler said of Bank of Canada Governor Stephen Poloz, who in his first policy decision last month left the policy interest rate unchanged and indicated the next move would probably be higher as slack in the economy disappears.
Employment growth should pick up to a pace of about 20,000 new jobs a month as the recovery accelerates, Chandler said.
Companies such as Teck Resources Ltd., Goldcorp Inc., Encana Corp. and Suncor Energy Inc. have been cutting spending plans as firms question the logic of large investments when commodity prices are weak.
Poloz told reporters July 20 that business executives are saying they’re still uncertain about foreign demand. CEOs are telling him “exports are growing but it’s no gangbusters yet and I’m not sure it’s going to last,” Poloz said.
Manufacturing employment, among decliners through June, rose 13,500 in July. Full-time employment fell by 18,300 in July, while part-time positions fell by 21,200, Statistics Canada said.
While the public sector shed jobs, private companies increased hiring by 31,400. Workers designated by Statistics Canada as employees fell by 42,500. The self-employed category rose by 3,200. Among provinces, Quebec led decliners posting a 30,400 drop in employment.
Average hourly wages of permanent employees rose 1.35 percent in July from a year earlier, down from 2 percent in June and the slowest since October 2011.