What does the slowdown mean for interest rates?
Canada’s jobless rate held steady in July – but overall employment inched downwards in a further indication that the economy is continuing to slow.
Statistics Canada said on Friday (August 9) that the unemployment rate remained unchanged at 6.4% last month as the economy culled a net 2,800 jobs, with part-time job losses helping cancel out gains in full-time work.
The July data means the national unemployment rate is nearly a percentage point higher than the same time last year and remains perched at its most elevated level for 30 months. The meek jobs figures, meanwhile, came in well below expectations of analysts polled by Reuters, who had anticipated a net gain of 22,500 jobs.
Participation in the labour market also dipped in July, falling by 0.3% on a month-over-month basis to 65.0%, with the labour force sliding by 11,000 even as the population ticked upwards by 125,000.
Employment was little changed in July 2024 (-2,800; -0.0%), while the employment rate fell 0.2 percentage points to 60.9%. The unemployment rate was unchanged at 6.4%.
— Statistics Canada (@StatCan_eng) August 9, 2024
For more info: https://t.co/Pn04OqBT6r. pic.twitter.com/eqnrDvYVCQ
Wage growth, which is keenly watched by the Bank of Canada because of its impact on overall inflation, is continuing to cool. Average hourly earnings growth came in at 5.2% year over year compared with 5.4% in June.
In a note posted after the release of the latest data, Royal Bank of Canada (RBC) assistant chief economist Nathan Janzen indicated a further slowdown in the labour market is likely ahead, especially with the unemployment rate expected to continue rising.
All signs point to another move by the Bank of Canada to bring rates lower in September, Janzen said. “Interest rates still look high relative to a softening economic growth (and inflation) backdrop,” he said, “and we continue to expect the BoC to cut the overnight rate for a third consecutive decision point next month.”
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