Canada loses 6,400 jobs in July, jobless rate rises to 5.5%

Canada's economy lost a net 6,400 jobs in July, entirely in part-time work, and the jobless rate rose to 5.5%, Statistics Canada data showed on Friday.

Analysts had forecast an increase of 21,100 jobs, and that the jobless rate would rise to 5.5%.

Market reaction: CAD/

STORY:

Link:https://www150.statcan.gc.ca/n1/daily-quotidien/230804/dq230804a-eng.htm

COMMENTARY

STEPHEN BROWN, DEPUTY CHIEF NORTH AMERICA ECONOMIST, CAPITAL ECONOMICS

"The small fall in employment and rise in the unemployment rate in July show that the labour market continues to loosen, suggesting that the unexpected jump in wage growth last month is unlikely to be sustained. With the Bank of Canada implying that the data need to surprise to the upside to warrant another interest rate hike, the softer labour market data support our view that the Bank is unlikely to follow through with current market pricing by raising rates further."

ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY AT DESJARDINS

"These ebbs and flows in the headline employment readings tend to occur around turning points. The simple fact that the economy has seen employment decline in two out of the past three months suggests that the Bank of Canada's efforts to rebalance the labour market are working. As a result, today's data reinforce our view that the central bank is done raising rates for this cycle."

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

"As is often the case, today's employment report brought mixed messages for the Bank of Canada, with the job count declining unexpectedly but wage growth accelerating much more than anticipated."

"As a result, today's data is unlikely to convince the Bank of Canada that the labour market has loosened enough yet to sustainably achieve its 2% CPI target, despite the weaker headline jobs count."

DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS

"I think it's an interesting signal that we've got a decline in headline employment and yet another rise in the unemployment rate. We're now up by six tenths of a percent from where we were a year ago on the unemployment rate and a pretty significant move."

"There were a number of areas that saw declines so it doesn't seem like it's a fluke and perhaps this is a real sign that things are indeed starting to soften."

"I think their (the Bank of Canada's) conclusion from this would be that it's probably not a bad idea to pause on the rate hike front after increases in June and July. Since the rate hike in July, they've had ... a fairly friendly CPI result and relatively modest GDP report as well. So I would say the balance of evidence since last time they moved on rates, has all pumped in the same direction and it's mostly pointing to that it would be prudent to now move to the sidelines, at least temporarily."