Canada’s labour market delivered a major surprise in June, posting a net gain of 83,100 jobs and pushing the unemployment rate down to 6.9 per cent, according to new data released Friday by Statistics Canada.
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The unexpectedly strong report has cast doubt on the likelihood of an interest rate cut from the Bank of Canada later this month. Economists say attention will now shift to the upcoming inflation data for clearer direction.
Prior to the release, analysts had largely anticipated a stagnant job market, with Bank of Montreal consensus estimates forecasting a loss of about 3,000 jobs and a rise in the unemployment rate to 7.1 per cent.
BMO economist Benjamin Reitzes described the figures as far beyond expectations, noting they weren’t “on the same planet” as the forecasts. While much of the job growth came from part-time employment, the report still marked a significant positive surprise.
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“Unless we see a sharp and unexpected drop in inflation when the June CPI numbers come out next week, today’s job figures — combined with ongoing trade-related uncertainty — make it likely the Bank of Canada will hold rates steady at its meeting later this month,” Reitzes said, referring to the inflation data due on July 15.
CIBC economist Katherine Judge echoed that sentiment, saying the June numbers demonstrate the resilience of Canada’s labour market. “Despite a still-elevated unemployment rate, the strength in other indicators within the report significantly reduces the chances of a rate cut at the July 30 announcement,” she said.
The report comes amid fresh tensions in the Canada-U.S. trade relationship, following President Donald Trump’s threat of new tariffs the night before. It also follows a weak labour market showing in May, when only 8,800 jobs were added and the unemployment rate edged up to 7.0 per cent.
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