Canada labour market stalls for second straight month
The Canadian economy unexpectedly shed jobs for a second straight month, pushing up the unemployment rate and increasing the likelihood that the country’s central bank may need to ease policy to provide support.
The country lost 24,000 jobs last month, according to Statistics Canada. That is the worst month for job creation since last August and confounded expectations for a gain of 15,000 jobs following the 2,200 decline in June.
Fewer positions, along with a rise in the number of people looking for work, combined to push the unemployment rate up from 5.5 per cent to 5.7 per cent in July.
Wage growth, which is closely watched by the Bank of Canada, surprised on the upside however, rising 4.5 per cent year-over-year, the fastest pace since January 2009. It is also a much bigger rise than the 3.8 per cent the market had expected.
“Weakening private sector employment at a time of heightened trade tensions and falling commodity prices is not a great story for Canada. The likelihood of rate cuts is increasing,” said James Knightley, chief international economist at ING.
The Canadian dollar weakened by as much as 0.4 per cent against the greenback immediately after the report was published. It later regained its footing to trade 0.1 per cent higher at C$1.321.
Global central banks have in recent weeks adopted a decidedly more dovish stance as the US-Chinese trade war intensified, darkening the outlook for global growth. New Zealand, India, Thailand and the Philippines all cut interest rates this week. The US Federal Reserve, which cut rates last month, is widely expected by the market to ease further before the end of the year.