Canada’s Jobs Market Pauses After Monster First Half of Year
(Bloomberg) -- Canada’s booming labor market geared down in June, with employment little changed and a slight uptick in the jobless rate from historical lows.
The economy shed 2,200 jobs on the month, Statistics Canada said Friday in Ottawa, versus economist expectations for a gain of about 10,000. The unemployment rate rose to 5.5%, after reaching a four-decade low of 5.4% in May.
The flat reading for employment in June doesn’t alter the picture of a hot labor market powering Canada’s expansion, with most economists widely expecting a slowdown from the economy’s recent unsustainable pace of hiring. That leaves the Bank of Canada plenty of ammunition to resist any pressure to cut interest rates, even if the U.S. Federal Reserve decides to ease policy.
“We’ll forgive Canada’s job market for taking an early summer holiday in terms of employment gains, given the massive surge in hiring that preceded it,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.
The economy has added 247,500 jobs since the end of last year -- the bulk of them full-time -- which is the strongest since 2002 and the second-best first-half employment gain in four decades.
Even in June, there were a number of pockets of strength in the report. Full-time jobs were up by 24,100, offsetting a decline in part-time employment. Self-employment fell, with the number of “employees” increasing.
Another good sign is that wage gains accelerated to the fastest in more than a year, with annual pay gains rising to 3.8% in June from 2.8% in May. Total hours worked accelerated to 1.8% on an annual basis, up from 1% in May.
“Perhaps the most noteworthy aspect to today’s report was the massive rise in wages,” Doug Porter, chief economist at Bank of Montreal, said in a note to investors. “For the Bank of Canada, the strength in wages and hours, and a still-low jobless rate will give them no reason to seriously consider matching Fed rate cuts anytime soon.”
The Canadian dollar fell after the report, which coincided the release of U.S. payroll data that topped all estimates. As of 9:36 a.m. in Toronto trading, the loonie was down 0.4% to C$1.3108 per U.S. dollar. Yields on Canadian two-year bonds were up, however, reflecting easing worries about rate cuts.
The one area of weakness seems to be the goods sector, which saw employment contract 32,800 in June. Half of that came from manufacturers. Employment in goods-producing industries is down by 9,400 in the first six months of 2019.
©2019 Bloomberg L.P.