OTTAWA - Canada’s economy unexpectedly lost 30,400 jobs in July in a third disappointing month for the labor market, suggesting the central bank will stay on the sidelines for longer as a global slowdown crimps growth at home.
The performance contrasts with new signs of strength in U.S hiring and was worse than even the most bearish forecast in a Reuters survey. An average of 5,000 people lost their jobs in each of the last three months, according to the Statistics Canada data on Friday.
“It seems as if the global headwinds have caught up to the Canadian economy,” said David Tulk, chief macro strategist at TD Securities.
Some of the details in the report were slightly more encouraging. The net job losses resulted from the elimination of 51,600 part-time positions, which overshadowed the 21,300 full-time jobs created. There was little change in both public and private sector employment.
Wages rose 3.9% in the year to July, up from 3.3% in June, as measured by hourly wages for permanent employees.
“The details are vaguely stronger than the headline would suggest ... However, all in all I think it’s a significant disappointment for Canada and one that is likely to weigh into expectations for the Canadian dollar,” said Camilla Sutton, chief currency strategist at Scotiabank.
The Canadian dollar weakened to C$0.9970 against the U.S. dollar, or $1.0030, from about C$0.9948 just before the data’s release.
The jobless rate climbed to 7.3% from 7.2%, with the biggest layoffs in wholesale and retail trade and in professional, scientific and technical services.
The market had expected some 9,000 jobs to be created in July after mediocre gains of 7,300 in June and 7,700 in May.
By contrast, U.S. data last week showed that in July employers hired the most workers in five months and the number of Americans filing for jobless benefits unexpectedly fell last week.
Bank of Canada Governor Mark Carney repeated his argument for raising interest rates in an interview with the BBC in London on Wednesday but most analysts don’t expect him to make a move until the third quarter of next year.
“I don’t think the market ever fully believed in the Bank of Canada’s fairly hawkish tone, but it certainly dampens expectations for rate hikes in Canada,” said Sutton.
Carney has conditioned rate hikes on the economy growing above the trend rate, estimated at about 2%.
Overnight index swaps, which trade based on expectations for the policy rate, showed that traders slightly decreased the already modest probability of a rate hike in December after the data.