Canada's labor market demonstrated continued resilience in June, adding 18,200 jobs. This figure surpassed economists' expectations of a 10,000 increase and followed a robust gain of 87,800 jobs in May. The unemployment rate also improved, falling to 6.5% from 6.6% in the previous month. This marks a decrease of 0.4 percentage points over two months, indicating a strengthening trend in job finding.
The report revealed a slight increase in full-time positions by 600, while part-time employment grew by 17,500. Average hourly earnings saw an acceleration, rising by 3.7% compared to 3.2% previously. The participation rate remained stable at 65.0%. These labor market indicators are closely watched by traders of CAD currency pairs, as they can influence the Bank of Canada's monetary policy decisions, which in turn affect the Canadian dollar's value.
Sectoral Shifts and Wage Growth
A closer look at the employment data showed some distinct shifts across sectors. The private sector was a significant driver of job creation, adding 32,000 positions, while the public sector experienced a reduction of 31,000. Among industries, accommodation and food services saw a notable gain of 15,000 jobs. Conversely, the manufacturing sector faced headwinds, shedding 17,000 jobs, effectively reversing its May gains. This sector has experienced a net loss of 61,000 jobs since January 2025, a period that Statistics Canada links to tariff-related uncertainties.
The observed pickup in wage growth could potentially influence the Bank of Canada's stance on interest rates. While the Bank's current policy rate stands at 2.25%, with the next decision scheduled for July 15, the improving labor market conditions and rising wages might lead some market participants to anticipate a more hawkish outlook. Current market pricing suggests approximately a 50% probability of an interest rate hike by December.
Overall, the June employment report paints a picture of a steadily improving Canadian labor market, characterized by consistent job growth and declining unemployment, though with some sectoral variations.
📰 Based on reporting from: ForexLive →