The Canadian economy shrugged off tariff uncertainty and added the largest number of jobs in six months, with the unemployment rate falling for the first time since January.
Employment grew by 83,100 positions in June, and the jobless rate fell 0.1 percentage points to 6.9%, Statistics Canada data showed Friday. Both figures far exceeded even the most optimistic projection in a Bloomberg survey of economists. Part-time work, however, was responsible for 84% of employment growth last month.
June marked the first time in five months where the economy created enough jobs to keep unemployment from rising, after months of tepid gains and losses. At the same time, Canada added a net of 143,800 jobs over the last six months, the slowest first-half year pace since 2018, excluding the pandemic, with a monthly average of 24,000 job gains.
The loonie trimmed losses after the report to trade at C$1.3668 per US dollar as of 8:49 a.m in Ottawa. Canadian yields climbed to day’s high after the data.
The central bank has held interest rates at 2.75% for the past two meetings and their path ahead will depend largely on how the economy and inflation adapts to tariffs and trade uncertainty. While the economy is expected to slow in the second quarter, firm inflation remains a concern for policymakers, who will set rates again on July 30.
Traders in overnight swaps trimmed expectations of easing at that meeting, putting the odds of quarter percentage point cut at about 15%, from 30% before the release.
“While the unemployment rate is still elevated, the strength in other measures in this report clearly diminishes the odds of a Bank of Canada cut in July,” Katherine Judge, an economist with Canadian Imperial Bank of Commerce, wrote in a report to investors.
So far, the data suggest the impact of the trade war on Canada employment hasn’t yet spread beyond industries particularly dependent on US demand. But there are fresh threats on the horizon: On Thursday, President Donald Trump said imports from Canada to the US will face a 35% levies starting August 1, in addition to tariffs on auto, steel and aluminum products already in place.
There’s already clear signs of tariff damage in those sectors: In the country’s auto production heartland, Windsor, Ontario, the unemployment rate has risen 2.1 percentage points in January to 11.2% last month, the highest among large Canadian metropolitan areas.
In June, there were 1.6 million unemployed people, up 9% from a year ago. The statistics agency said people are facing greater difficulties finding work and more than one in five had been searching for 27 weeks or more. The layoff rate last month was unchanged.
The employment rate — the proportion of the working-age population that’s employed — rose 0.1 percentage points to 60.9% in June. The private sector added 47,000 jobs and public sectors gained 23,000 positions.
Employment in wholesale and retail trade grew by 34,000 last month. Health care and social assistance, professional services and manufacturing also saw some of the biggest increases. Agriculture was the only industry with a notable employment decline.
Total hours worked rose 0.5% in June, and were up 1.6% from a year earlier.
Employment grew in Ontario, Quebec, Alberta and Manitoba, while it fell in Newfoundland and Labrador and Nova Scotia.
Yearly wage growth for permanent employees decelerated to 3.2%, versus economist expectations for compensation holding steady 3.5%.