Employment growth in Canada fell 1,400 in June to miss Econoday's consensus for a 21,300 gain and following May's modest 27,000 rise. The unemployment rate jumped from 6.2 to 6.4 percent which exceeds the 6.3 percent consensus. Underscoring the weakness is a dip in the participation rate from 65.4 to 65.3 percent and a 0.4 percent fall in total hours worked. The soft results failed to cool average hourly wages which rose from an annual 5.1 to 5.4 percent.

By sector, employment in transportation and warehousing fell 12,000 and public administration fell 8,800. Employment rose 17,000 in accommodation and food services and rose 12,000 in agriculture.

Turning back to unemployment, the rate has now risen 1.3 percentage points over the last year. Only 21.4 percent of the unemployed in May found work in June, which is lower than the 26.7 percent average of the three years before the pandemic. StatCan notes this"may indicate that people are facing greater difficulties finding work in the current labour market".

The Bank of Canada cut rates last month for the first time this cycle and a second cut, given the combination of flat employment growth and rising wages, will be a clear topic of discussion at the bank's meeting later this month on Wednesday, July 24. Canadian data had been comfortably exceeding forecasts but today's results pull down Econoday's Relative Performance Index sharply to plus 11 to indicate only the slightest outperformance.

Employment in June is expected to rise 21,300 versus May's higher-than-expected 27,000 that followed April's much higher-than-expected 90,400 jump. The unemployment rate is expected to rise a tenth to 6.3 percent in June as it did in May.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.