Canada unexpectedly shed 9,400 jobs in June and the unemployment rate rose to 7.1 percent from May's 7.0 percent, underlining how employment growth has stalled despite a recovery in the United States. Statistics Canada said on Friday that the year-over year gain was just 72,300 jobs, or 0.4 percent, the lowest annual growth rate since the 0.4 percent recorded in February 2010. Analysts surveyed by Reuters had expected a gain of 20,000 jobs in June.
"If you take the moving average for the first half of this year, it suggests very minimal job growth so far in Canada, so it has been a bit disappointing," said Paul Ferley, assistant chief economist at the Royal Bank of Canada. Market operators expect worries about soft economic growth will keep the Bank of Canada from hiking interest rates until late next year, a Reuters poll found on Thursday. The bank's next scheduled interest rate announcement is on Wednesday, when it will also issue its quarterly monetary policy report.
The central bank has kept its key interest rate at a near record low 1.0 percent since September 2010 and says it will not contemplate an increase until inflation picks up and the economy absorbs more excess capacity. "It means the Bank of Canada will continue to ignore the recent upturn in inflation and focus on an economy that is yet to kick into higher gear," said Sal Guatieri, senior economist at BMO Capital Markets.
The economy created 33,500 full-time jobs in June but lost 43,000 part-time positions. Employment fell in manufacturing and business, building and other support services, while more people found jobs in construction. The six-month moving average for employment growth jumped to 8,800 from 3,000 in May, when the figure included a net loss of 44,000 jobs in December 2013. Commenting on the June report, Finance Minister Joe Oliver said jobs numbers are variable, noting that in May there had been an increase in part-time jobs. "We expect that kind of monthly variation, but we believe the economy is strong. We have created over 1 million jobs since the recession," he told reporters in Toronto.
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