By David Ljunggren
OTTAWA, Aug 7 (Reuters) – Canada’s economy added far more jobs in July than expected and the unemployment rate dropped to a two-year low, data showed on Friday, in another sign the economy is coping with U.S. tariffs and international tensions.
Statistics Canada said employment had jumped by 75,100 positions on strong gains in both the full-time and part-time sectors. The jobless rate fell for the third consecutive month, dipping from 6.5% to 6.4%, a level last seen in July 2024.
Analysts polled by Reuters had forecast a net gain of 16,500 positions and estimated the jobless rate would remain at 6.5%.
July’s blowout follows the creation of 87,800 jobs in May.
“(This) is further evidence that the economy is gaining momentum after a weak start to the year … there was really nothing in the report to dislike,” said Arlane Curtis, senior North American economist at Capital Economics.
The Bank of Canada said on July 15 that there were clear signs the economy was dealing better with the challenges posed by U.S. President Donald Trump’s tariffs and the uncertainty caused by the Middle East conflict.
It predicted annualized second quarter growth would hit 2.5% after stalling earlier in the year. Preliminary Statscan data issued later that month showed the second quarter gain was likely to be 3.4%, the most in three years.
The Bank of Canada has kept rates at 2.25% since last October and money markets are not expecting it to hike them until next year.
The Canadian dollar strengthened 0.4% to a near eight-week high of C$1.3959 to the U.S. dollar, or 71.64 U.S. cents.
In July, full-time employment increased by a net 38,600 jobs while part-time employment rose by 36,600 positions.
Gains were focused on the private sector, with strength in wholesale and retail trade, finance and insurance, and professional and scientific services.
The average hourly wages of permanent employees, a metric closely tracked by the central bank to gauge inflation expectations, grew 3.0% in July, down from 3.7% in June.
This was the lowest since the 2.8% year-on-year increase recorded in February 2022.
“(The data) add to the evidence that businesses are finding ways to navigate the current trade-related uncertainty. That said, even with the big gains seen in July, the labor market isn’t back to full health,” said Royce Mendes, managing director and head of macro strategy at Desjardins.
“The Bank of Canada will want to see more of a recovery before it considers tightening policy,” he said in a note.
(Additonal reporting by Fergal Smith in Toronto;Editing by Dale Smith, Kirsten Donovan)
Comments