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Canada records surprise job gains in June as unemployment rate dips to 6.9%
The economy added 83,100 new jobs in June, the first net increase since January, Statistics Canada said. Most of the employment growth was in part-time work.
Analysts polled by Reuters had estimated the unemployment rate would tick up to 7.1 per cent from 7 per cent in May, with no job additions. The jobs report usually has a standard error of around 32,000 between two consecutive months.
Friday's release was the final jobs report before the Bank of Canada's monetary policy decision on July 30, and better-than-expected unemployment and job addition numbers are likely to tilt the bank towards another hold in its policy rate.
June inflation data is due out next week.
Money market bets for a rate cut this month shrank to below 20 per cent following the labor force survey.
On Thursday, rate cut bets were at 30 per cent after US
President Donald Trump said he would impose 35 per cent tariffs on Canadian imports from Aug. 1, up from 25 per cent previously threatened.
"While the unemployment rate is still elevated, the strength in other measures in this report clearly diminishes the odds of a BoC cut in July," Katherine Judge, economist at CIBC Capital Markets wrote in a note.
The Canadian dollar was trading down 0.12 per cent to 1.3671 to the US dollar, or 73.15 US cents. Bond yields on the two-year government bonds were up 1.9 basis points to 2.715 per cent.
While the number of unemployed Canadians in June changed only slightly from May, it was up 9 per cent to 128,000 on a year-over-year basis. And more than one in five unemployed people had been searching for work for 27 weeks or more in June, an sharp increase from a year ago.
Statistics Canada said the layoff rate in June did not show any major uptick and remained low at 0.5 per cent relative to historical averages barring recessionary periods.
Tariff-exposed sectors such as transportation and manufacturing had been showing signs of strain for the three months through May.
The employment in transportation dropped by 3,400 people in June while manufacturing posted a jump of 10,500, StatsCan said.
The biggest increase in employment was a 33,600 jump seen in wholesale and retail trade. Healthcare and social assistance saw an increase of 16,700 people while the agriculture sector shed 6,000 employees in June.
The participation rate - the portion of the population over the age of 15 that is economically active - was at 65.4 per cent in June, up from 65.3 per cent in May.
The average hourly wage of permanent employees - a gauge closely tracked by the BoC to ascertain inflationary trends - grew by 3.2 per cent to C$37.22.
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