Canada’s unemployment rate rose for a third-straight month in July as the economy shed 6,400 jobs, a softening which economists say could impact the Bank of Canada’s next interest rate decision.
Statistics Canada said on Friday that in July, the unemployment rate increased 0.1 percentage points 5.5 per cent. July marks the first time the unemployment rate has increased for three consecutive months since the early months of the COVID-19 pandemic.
“The soft July employment report is just the latest arrow in the quiver of signs that the economy is losing momentum,” Doug Porter, chief economist and managing director of economics at BMO, said in a note Friday.
According to Statistics Canada, employment fell among core-aged men aged 25 to 54 years old by 0.4 per cent, and increased among male youth aged 15 to 24 by 0.9 per cent.
There was little variation in employment among young and core-aged women, and among men and women aged 55 and older.
Statistics Canada said job losses were led by the construction industry, while the greatest job gains were made in health care and social assistance.
Employment increased in Alberta, New Brunswick and Prince Edward Island while it declined in Manitoba and Saskatchewan. All other provinces posted little change in July, Statistics Canada said.
More than half of the unemployed (53.6 per cent) had been out of the labour force immediately before becoming unemployed in July, while 38.7 per cent had left or lost a job.
On a year-over-year basis, average hourly wages rose five per cent in July, following increases of 4.2 per cent in June and 5.1 per cent in May.
Rising unemployment comes as high interest rates weigh on the economy, making borrowing more expensive for both businesses and consumers.
What the jobs data could mean for the Bank of Canada
The softening in the labour market also has implications for the Bank of Canada’s next interest rate decision on Sept. 6, economists say.
However, the central bank will have additional data to consider as well, including the July inflation report and June GDP figures, which are due in the coming weeks.
The employment figures, combined with the latest inflation report, shows the case is strong for the Bank of Canada (BoC) not to raise its policy interest rate further, Porter said.
“Looking beyond the next rate decision, we suspect that the bank may be done raising rates, although still-firm wage and core price growth means that rates are likely to stay high for long,” Porter added.
Unlike Porter, James Orlando, director and senior economist with TD Bank, said in a note the central bank “isn’t likely to change its hawkish tone” yet.
“While odds of another rate hike dropped following this report, the BoC will need to see more of the same before it can feel like its job is done,” he said Friday.
“Today’s report is in line with our expectation for a rising unemployment rate and a further slowing in economic momentum through the rest of this year.”
Marc Desormeaux, principal economist with Desjardins, said in a note he expects the Bank of Canada to keep rates on hold at its next meeting on Sept. 6.
“Economic activity appears to be moderating amid sharply higher borrowing costs, and we maintain that the full effects of prior increases have yet to be felt by Canadian consumers and businesses,” Desormeaux said.
“However, the pickup in wage gains and continued boost from population growth suggest that the Bank of Canada will remain attuned to the risk that core persistent inflation stays sticky for a while. That said, with officials expressing the desire to avoid overtightening, we believe that the bar for further hikes is high in light of the recent signs of weakening in growth, employment, and inflation.”
Carrie Freestone, an economist with RBC Economics, said in a note that the July jobs report is a “point in favour” for the central bank.
“Today’s jobs report is a point in favour of keeping the overnight rate at five per cent, but the BoC will closely monitor additional indicators – particularly upcoming inflation and consumer spending reports – to determine whether an additional hike is needed,” Freestone said Friday.
Meanwhile down south, U.S. employers added 187,000 jobs last month. That led America’s unemployment rate to dip to 3.5 per cent from 3.6 per cent in June in a sign that the U.S. job market remains resilient.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
