The Canadian employment levels fell for a second straight month in July as workers dropped out of the labor force. The unemployment rate was at record lows.
The economy lost 30,600 jobs last month, according to Statistics Canada, a surprise negative reading compared to the 15,000 gain anticipated by economists. The unemployment rate was at 4.9%, because the labor force also shrank by a similar amount.
The employment drop last month adds to a loss of 43,200 jobs in June, suggesting that Canada's employment boom has come to a stop over the past year.
The question now is how much of the slowdown is caused by labor supply factors, and how much is affected by the initial impact of higher borrowing costs and weakness in underlying demand. The Bank of Canada has tightened policy aggressively because of concerns that demand for labor has outpaced supply, which is important for the mix.
The Canadian dollar fell by 0.6% to C $1.2939 per U.S. dollar at 8: 45 a.m. in Toronto trading. Yields on Canadian government two-year bonds went up 8 basis points to 3.24%. The U.S. released employment data on Friday showing non-farm payrolls increased 528,000 last month, beating all estimates and the largest increase in five months.
The labor market's labor market is tighter, even with the fall in employment, according to the data. Labor force participation fell for a second month, dropping to 64.7% from as high as 65.4% in March. The number of Canadians in the labor force fell by 27,000, mostly women, which adds to the 97,500 drop in June.
The average hourly wage rate was up 5.2% from a year ago, unchanged from June, and matching the fastest increase in records dating to 1997, outside of the pandemic.
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