Canada’s job market surprisingly gained 83,000 positions in June, pushing the unemployment rate down to 6.9 per cent from seven per cent and adding another wrinkle to predictions of where

interest rates are headed. Economists’ estimates ranged from a gain of 25,000 positions to a loss of 10,000 jobs. The average estimate was for zero gains in June and for the unemployment rate to rise to 7.1 per cent, according to Bloomberg.

‘Resilience in June’: CIBC

Here is what economists think the numbers mean for the Bank of Canada and the upcoming interest rate decision on July 30. “Canada’s labour market showed its resilience in June,” Katherine Judge, an economist at CIBC Capital Markets, said in a note, pointing to the large net gain in jobs, particularly the increase in manufacturing positions, up 11,000 from the month before.

She also pointed to gains in the retail sector and the rise in hours worked as reinforcing the picture that the

labour market is hanging on, despite a still “elevated” unemployment rate.

Average hourly wage gains grew 3.2 per cent in June year over year, down from 3.4 per cent in May. The Bank of Canada has been worried that growing wages will boost inflation.

Judge said the 0.5 per cent rise in hours worked is another sign of resilience.

“The strength in other measures in this report clearly diminishes the odds of a (Bank of Canada) cut in July,” she said.

‘Under the hood’: Capital Economics

“June suggests the labour market is in better shape than we had feared, despite ongoing uncertainty around Canada’s trade relationship with the U.S.,” Thomas Ryan, North America economist at Capital Economics Ltd., said in a note.

He said the job gains in June were the largest since December, when the economy added 91,000 positions, adding that “under the hood, there were plenty of encouraging signs.”

Among them are that half the gains came from the private sector and that even though the majority of the new jobs were part time, it was significant that the hours worked rose, which he said bodes better for

gross domestic product (GDP). Ryan said it was encouraging that the manufacturing sector managed to add jobs, “showing tariffs and tariff uncertainty have not completely toppled the factory sector.”

Capital had called for two more interest rate cuts this year, but he thinks fewer may be delivered given the relative strength of this report.

‘Hot start to the summer’: Desjardins

“Canada’s labour market apparently experienced a hot start to the summer,” Royce Mendes, managing director and head of macro strategy at Desjardins Capital Markets, said in a note.

Employment “markedly” jumped in the services sector despite the closure of Hudson’s Bay Co. stores, while the manufacturing sector showed “signs of life,” he said.

He said the numbers boost Desjardins’ tracking for second-quarter GDP, though it remains in a range of minus 0.5 per cent to zero per cent.

  • Canada’s unemployment rate drops
  • New Ontario rules will complicate the hiring process

However, Mendes doesn’t think the labour report will matter so much to the Bank of Canada, with the upcoming inflation report playing a more significant role in the next interest rate call.