| Consensus | Consensus Range | Actual | Previous | |
| Employment - M/M | 10,000 | 10,000 to 25,000 | 18,200 | 87,800 |
| Unemployment Rate | 6.6% | 6.5% to 7.0% | 6.5% | 6.6% |
| Participation Rate | 65.0% | 65.0% |
Highlights
The Canadian economy added 18,200 jobs in June, coming in at the high end of expectations that had ranged from 10,000 to 25,000 in an Econoday survey of forecasters. The upside surprise was amplified by the fact that the above-expected gain came on the back of a 87,800 surge in May. Put in perspective, while employment was up a cumulative 88,300 in the second quarter, it was not enough to recover the 94,600 drop in the first quarter.
The unemployment rate edged down to 6.5 percent from 6.6 percent, with the participation rate unchanged at 65.0 percent.
Average hourly wage growth accelerated to 3.3 percent year-over-year from 3.0 percent in May (not seasonally adjusted), an unwelcome development for the central bank.
Tempering the June upside employment surprise, the composition of jobs revealed more weakness than the headline indicated, with just 600 full-time positions added, as hiring focused on part-time, up 17,500.
In June, hiring was concentrated in the private sector, where the number of employees was up 31,600, offsetting a 30,500 drop in the public sector. Self-employment was up 17,000.
The sector breakdown also showed a mixed picture, with goods-producing industries shedding 43,700 jobs while services were up 61,800.
Looking ahead, the second quarter Bank of Canada Business Outlook Survey based on responses collected in May does not point to strong hiring. Most firms continue to report spare capacity and fewer report more difficulty to find labor than a year ago, reversing some of the increase seen over the past year.
The sister Canadian Survey of Consumer Expectations providing employees' perspective shows that perceptions of a soft labor market persist despite less concern about job loss. Concerns about the impact of AI on the job market combined with the broader economic uncertainty negatively affect the perceptions.
All major categories of goods-producing industries were down on the month except for a meager 1,000 increase in natural resources. Manufacturing decreased 16,800, construction was down 12,900 and utilities down 7,300.
In services, employment gains were widespread across most sectors, led by a 16,400 gain in wholesale and retail trade and a 14,700 increase in accommodation and food services, two areas typically relying on part-time hiring during vacation season. on the downside, educational services fell 6,700.
Market Consensus Before Announcement
The jobless rate is expected flat at 6.6 percent in June. Employment is seen up a modesy 10K after an outsized 88K increase in May.
Definition
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.
Description
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.