By Robb M. Stewart
OTTAWA--Hiring in Canada ground to a halt last month, pushing the unemployment rate to a fresh more than two-year high and offering some comfort to the central bank after a surprise acceleration in inflation.
Canada's economy lost a slight 1,400 jobs in June and the unemployment rate was 0.2 percentage point higher at 6.4%, Statistics Canada reported Friday. The result undershoot market expectations for the addition of a modest 25,000 jobs and a forecast unemployment rate of 6.3%.
When calculated using U.S. Labor Department methodology, Canada's unemployment rate climbed to 5.4% last month from 5.2% in May.
It is the second month this year that employment was virtually unchanged, even as continued high levels of immigration have expanded the working age population. Employment in the first half of the year grew 0.9%, while the labor force expanded 1.6% in the same time.
The household jobs survey is the last before the Bank of Canada's governing council gathers late this month to decide on monetary policy and to decide whether to follow up with a second cut to interest rates. While policymakers will gather one further inflation report before then, elevated wage growth could be cause for concern even if signs of a soft labor market suggest inflationary pressures should cool down the line.
Canada's economy resumed growth in the early months of the year after stalling in mid-2023, but inflation had been steadily cooling and the jobless rate has been edging up. The rate of unemployment has been rising since April 2023, advancing 1.3 percentage points over that period. The data agency said there were 1.4 million unemployed last month, a rise of 42,000 from the month before.
The employment rate, the proportion of the working-age population that is employed, continued to trend lower and hit 61.1% in June from 61.3% in May.
Total hours worked also declined last month, falling 0.4%, though compared with a year earlier hours worked were up 1.1%.
Still, wage growth accelerated for a second straight month. Pay is being watched closely by the Bank of Canada for signs of inflationary pressures, after it last month became the first Group of Seven central bank to lower its policy interest rate following aggressive increases in borrowing costs to tame inflation.
Average hourly wages climbed 5.6% on a year earlier in June, quicker than the 5.2% rise the prior month and well ahead of annual inflation, which unexpectedly picked up to 2.9% in May after easing in April.
Statistics Canada's survey showed that jobs numbers in transportation and warehousing and in public administration declined in June, though there were more people employed in accommodation and food services and in agriculture.
Job gains were focused in part-time roles, with employment edging up 1,900 from May. That was offset by a 3,400 drop in full-time employment.
Compared with June last year, Canada has added 343,000 jobs, with much of that growth in the public sector. Self-employment last also rose, increasing by 55,000 on a year earlier, though that remains below the pre-pandemic pace.
With the dip in employment and rise in unemployment last month, the labor-force participation rate--the proportion of the working-age population who were either employed or unemployed--eased to 65.3% from 65.4% in May.
Write to Robb M. Stewart robb.stewart@wsj.com
(END) Dow Jones Newswires
07-05-24 0856ET
