OTTAWA — Canada suffered a net loss in jobs last month but overall performance on the employment front was better than expected in a result that did little to shed light on what the Bank of Canada will do on interest rates next week.
The central bank is expected to reduce its economic outlook for the year, but whether it will cut its key interest rate is a matter of debate among economists.
“On balance, this was a slightly better result than expected and makes the (central) bank’s decision next week very much a toss-up,” BMO chief economist Doug Porter said of the jobs report.
“Having forecast that we expect the bank to trim rates next week, we’re not going to change the call on one murky labour force survey — but it will make for one intense debate next week for the bank, especially if Greece does indeed manage to reach a deal this weekend.”
Statistics Canada said there were 6,400 fewer jobs last month, as a strong gain in full-time employment only partially offset a bigger decline in part-time positions.
The economy shed 71,200 part-time jobs, which provide fewer than 30 hours per week, but added 65,800 full-time jobs. The national unemployment rate held steady at 6.8 per cent.
Economists had expected a loss of 10,000 jobs and an uptick in the unemployment rate to 6.9 per cent, according to Thomson Reuters.
Concerns have been raised in recent days about the strength of the Canadian economy, with some speculating the country slipped into recession in the first half of the year following a string of disappointing economic data.
The jobs report was the last major economic data point before the rate announcement and the release of the central bank’s latest monetary policy report.
The C.D. Howe Institute’s monetary policy council recommended Thursday that the Bank of Canada keep its target for the overnight rate on hold at 0.75 per cent.
However the decision wasn’t unanimous. Seven members of the think-tank’s council voted to keep the key rate on hold, while four supported a cut to 0.50 per cent.
CIBC chief economist Avery Shenfeld said it will likely be a close decision, but stuck with his prediction of a rate cut.
“We still lean towards one more rate cut from the Bank of Canada in the coming week, because forecasts of sunnier times ahead have a lot of downside risk,” Shenfeld wrote in a note.
Porter pointed to several areas of strength in the jobs report, including that it was the third month in a row that full-time employment posted strong growth and that wages were up three per cent from a year ago.
Total hours worked in June were “quite strong,” he said, adding “usually that’s not a bad rule of thumb for how the overall economy performed.”
Compared with a year ago, employment increased by 176,000 over the past 12 months, entirely the result of more full-time work, while the total number of hours worked grew by 2.1 per cent.
Breaking down the jobs report, public sector employment increased by 42,200 for the month, while the number of private sector jobs slipped 26,300.
The number of self-employed decreased 22,200.
Regionally, Quebec lost 33,300 jobs and New Brunswick lost 3,500. British Columbia gained 15,400, while Newfoundland and Labrador added 4,300. Ontario added 14,000 jobs for the month.
The goods-producing sector lost 1,900 jobs, while the services sector lost 4,500.
For the second quarter of the year, Statistics Canada says there were a total of 33,000 jobs added as there were 143,000 full-time jobs gained and 110,000 part-time jobs lost.