OTTAWA (Reuters) -Canada’s economy unexpectedly lost jobs for the second month in a row in July after a year-long boom, while the unemployment rate stayed at a record low 4.9%, official data indicated on Friday.
Statistics Canada reported 30,600 positions were shed, marking the second month in a row of relatively moderate losses. Between May 2021 and May 2022, the economy added a hefty 1.06 million jobs as the recovery from COVID-19 took hold.
Analysts polled by Reuters had expected an increase of 20,000 positions and for the jobless rate to edge up to 5.0%.
The average hourly wages of permanent employees – a figure the Bank of Canada watches closely – rose by 5.4% from July 2021, down from the 5.6% year-on-year increase seen in June but sharply higher than the 2.4% seen at the start of the year.
Derek Holt, vice president of capital markets economics at Scotiabank, said the July figures were disappointing but predicted Canada’s central bank would keep raising interest rates in its bid to crush inflation.
“I think they know full well that fighting inflation is going to break a few things, and one of them will be slowing job market momentum,” he said.
The central bank last month surprised markets by raising its main interest rate by 100 basis points in a bid to tackle inflation, and said more hikes would be needed.
The number of public sector employees dropped by 51,000 in July, the first decline in 12 months.
The services sector shed 53,200 jobs while the goods sector added 22,600 jobs. Statscan said there was no indication of increased job churn despite the tight labor market.
The central bank’s next fixed rate announcement is on Sept. 7, with the August jobs data due out on Sept 9.
“The Bank of Canada will likely focus on the historic low unemployment rate and still strong wage growth to justify another non-standard rate hike at its next meeting,” said Andrew Grantham, senior economist at CIBC Capital Markets.
The Canadian dollar was trading 0.6% lower at 1.2945 to the greenback, or 77.25 U.S. cents, in part pushed down by strong U.S. jobs data.
Source: Economy - investing.com
