OTTAWA, Jul 7 (Reuters) – Canada’s economy added far more jobs than expected in June, data showed on Friday. Analysts say the deal for a new rate hike from the Bank of Canada (BoC) is likely to be sealed next week.
The number of jobs increased by a net 59,900 in June, the highest since January and above an expected increase of 20,000, while the unemployment rate rose from 5.2% to 5.4% as more people looked for work, data from Statistics Canada on Friday.
The unemployment rate rose for a second consecutive month in June and is now at its highest level since February 2022, though still below a pre-pandemic 12-month average, Statscan said.
The June jobs report is the last major economic figure to be released before the announcement of the BoC’s share price on Wednesday.
The job numbers “are good enough to give the green light for the bank to raise next week,” said Derek Holt, vice president of Capital Markets Economics at Scotiabank. “We still have a job market that is holding up well.”
The central bank raised its overnight rate to a 22-year high of 4.75% last month amid concerns about continued inflation and said further steps would depend on the latest economic data.
Data from the past month has shown some signs of slowing down – inflation cooling to 3.4%, a tepid May jobs report and a surprise trade deficit in May – but not enough to dampen market expectations of another rate hike.
Growth has remained resilient despite nine rate hikes totaling 450 basis points since March last year. The economy picked up again in May and probably grew by 0.4% month on month, after stagnating in April.
“The return to solid job growth in June … should bring a second straight rate hike of 25 basis points next week as central bankers scramble to deal with the surprisingly resilient economy and resulting excessive inflationary pressures,” said Royce Mendes, head of macro strategy at Desjardins Group.
A large majority of economists surveyed by Reuters also expect the bank to raise rates by another quarter point and then hold well into 2024.
The Canadian dollar traded 0.3% higher at $1.3328, or 75.03 cents.
Average hourly wages for permanent workers – a figure closely monitored by the Bank of Canada – rose 3.9% as of June 2022, compared to a 5.1% year-over-year increase in May. It was the smallest wage increase in 14 months.
The net job addition in June, the largest since January, was driven by full-time employment. Employment gains were concentrated among men aged 15 to 24 and in the core age group of 25 to 54, while employment among women of all age groups was little changed in June.
Employment in the goods sector increased by a net 9,800 jobs, mainly in the manufacturing sector, while a net 50,000 jobs were added in the services sector in June, led by wholesale and retail, as well as the health and social assistance sectors.
Reporting by Ismail Shakil and Steve Scherer in Ottawa; Additional reporting by Dale Smith in Ottawa, edited by Emelia Sithole-Matarise and Mark Porter
Our standards: The Thomson Reuters Principles of Trust.