- Economy sheds 700 positions; unemployment rate falls to 6.8%
- Hiring stalls, trade falters ahead of rate decision next week
Canada’s job market weakened in June as hiring stalled and people left the labor force, making the second quarter the most sluggish for payrolls in two years.
Employment fell by about 700 with full-time work down by 40,100 positions and 39,400 part-time jobs created, Statistics Canada said Friday in Ottawa. That left a second-quarter gain of about 11,000 positions, or 0.1 percent -- the smallest quarterly change since the same period in 2014, when the economy shed 10,000 jobs.
The number of people in the labor force declined by 20,900 in June, which helped lower the unemployment rate to 6.8 percent from 6.9 percent. Economists surveyed by Bloomberg News projected a gain of 5,000 positions and a 7 percent jobless rate.
Canada is showing other signs of wear including the widest-ever monthly trade deficits in April and May. Since then, bigger questions have emerged about global demand such as potential damage from the Brexit vote and resulting turmoil. Bank of Canada Governor Stephen Poloz, who has a rate decision Wednesday, maintains there is slack in the job market and argues the economy remains on track for a recovery led by services and non-energy exports.
Slow job growth “is an added point of caution” after the weak trade reports, according to Derek Holt, Scotiabank’s vice-president of economics. “The bigger worry to me is the non-energy export side not performing” as well as policy makers expected, he said by phone from Toronto.
Goods producing firms saw employment decline by 46,200 in June, including 28,700 construction workers and 12,900 factory jobs. Service industry employment climbed by 45,500, including 20,200 jobs created in accommodation and food service.
Another sign of weakness was a rise of 37,700 people who were self-employed, which Holt said can be a “dubious gain.” The labor force participation rate also fell to 65.5 percent, its lowest since 1999.
“The details were almost uniformly weak,” said Doug Porter, chief economist at BMO Capital Markets in Toronto.
Canada’s dollar fell after the report, weakening 0.2 percent to C$1.3025 per U.S. dollar at 9:35 a.m. in Toronto.
In the U.S., however, there were signs of strength Friday. The Labor Department reported payrolls climbed by 287,000 in June, exceeding the highest estimate in a Bloomberg survey, after a revised 11,000 gain in May.
“The consolation prize for the Bank of Canada was the nice, solid comeback in U.S. jobs last month -- which suggests our biggest trading partner is still rolling along,” Porter said.