Unemployment rate holds at 7.4 percent as economy adds 28,000 jobs
By Craig Wong The Canadian Press
By Craig Wong The Canadian Press
The Canadian economy posted better than expected job growth in June, helped by a gain in part-time jobs, to post its third consecutive month of increases.
Statistics Canada has reported that the net gain of 28,000 jobs came at the end of a quarter of slow economic growth. It stood in stark contrast to a disappointing report south of the border, where the much larger U.S. economy gained just 18,000 jobs.
TD Bank chief economist Craig Alexander called the discrepancy “ridiculous.”
“In the wake of the recent recession, the Canadian economy is generating a job-filled recovery, even to the point where economists are worried about the fact that it doesn’t appear that we’re getting much productivity growth out of our workers,” he said. “Meanwhile, the story in the United States is the dead opposite.”
Statistics Canada said that the Canadian economy added 21,000 part-time jobs, compared with 7,000 new full-time jobs. Economists had expected an overall increase of 10,000 jobs. Meanwhile, the country’s unemployment rate held steady in June at 7.4 percent as the number of people entering the workforce increased.
In the U.S., however, the employment rate rose to 9.2 percent, from 9.1 percent in May, according to the U.S. Labour Department.
The loonie was down 0.53 of a cent to 103.78 cents US following the two reports.
BMO deputy chief economist Douglas Porter characterized the Canadian report as a small point in favour of the Bank of Canada gradually raising its key interest rate later this year.
“If you blinked, you may have missed the slowdown in Canada’s job growth,” Porter wrote in a note to clients. “While the details of the release may not be as impressive as the sturdy headline, there is no denying that the labour market continues to make impressive progress.”
The Canadian results came as the economy slowed in the second quarter.
David Madani, Canadian economist at Capital Economics, said GDP growth in Canada slowed to an annual rate of 1.2 percent in the April-June quarter compared with a rate of 3.9 percent in the first three months of the year.
“Although we anticipate a partial rebound in the third quarter, prospects for a sustained rebound in the second half of this year appear to be slipping,” Madani wrote in a note. “We also expect any pick up in U.S. economic growth during the second half of this year to be limited, and growth in the developing world appears to be slowing.”
Alexander noted that it was that weakness in the U.S. and worries about the global economy that would likely keep the Bank of Canada from raising its key interest until next year.
The bank last hiked interest rates in September 2010, lifting its policy setting rate to one percent.
“The recent job numbers and the recent inflation numbers would make the case from a domestic point of view that they could raise rates in the near term,” Alexander said. “However, most of the commentary from the Bank of Canada has emphasized the external risks.”
Alexander also noted that he expected job creation in Canada to slow in the second half of the year.
“It is not going to be negative. It is not going to contract or anything like that. It’s just going to have to slow because the economy won’t support the same rate of job creation,” he said.
In Canada, the public sector added 51,000 jobs in June, while there were 22,000 new jobs in the private sector. However, those gains were offset by a drop of 44,000 in the number of self-employed people in Canada.
The gains were led by the transportation and warehousing industry, which saw a gain of 15,000 jobs, while the professional, scientific and technical services sector lost 19,000 jobs. The construction and manufacturing sectors were little changed for the month.
Ontario, Alberta and Nova Scotia all posted employment gains in June, while Quebec and Newfoundland and Labrador saw losses.
Employment was up 40,000 jobs in Ontario following a slight drop in May.