Canada's unemployment rate rose to 6.9% in April, while job growth only registered a small increase of 7,400 jobs, according to official data released by Statistics Canada on Friday. This shows that the already weak labour market is now faltering, with global uncertainties including the ongoing trade war having a significant impact.
Derek Holt, vice-president of capital markets economics at Scotiabank, said the report reinforces the case for the Bank of Canada (BoC) to consider a rate cut in June. "The job market was already weak before the trade war, and now it looks like it's starting to collapse," he said.
However, part of the job gains this month were due to election-related hiring, not real growth in key sectors. "Without the election component, this data is very weak," said one analyst, adding that weak seasonal adjustment factors also contributed to the low employment figure.
The Bank of Canada is expected to remain cautious before making any decisions. “They need more evidence. The question is, how do they balance the risks to growth and jobs with their core inflation mandate?” Holt said. For now, Canadian monetary policy remains in a wait-and-see phase.
