Canada’s unemployment rate unexpectedly fell one point to 6.9% in June, driven by gains in the wholesale and retail trade and health care and social assistance sectors, data released Friday showed.
The economy added 83,100 new jobs in June, the first net gain since January, Statistics Canada reported. Most of the gain was in part-time jobs.
Analysts had expected the unemployment rate to rise to 7.1% from 7.0% in May, with no job gains. The jobs report typically has a standard error of around 32,000 between two consecutive months.
This is the last jobs report before the Bank of Canada’s monetary policy decision on July 30. The better-than-expected unemployment and job gains are expected to prompt the central bank to keep interest rates on hold.
June inflation data due next week is expected to be the final factor that will help the central bank make its final decision.
Money market bets on a rate cut this month fell to below 20% after the report was published from 30% on Thursday, after US President Donald Trump threatened to impose a 35% tariff on all imports from Canada starting August 1, in addition to existing tariffs on several sectors.
The Canadian dollar fell 0.12% to 1.3671 against the US dollar, or 73.15 US cents. The two-year government bond yield rose 1.9 basis points to 2.715%.
The number of unemployed people in June was almost unchanged from May, but rose 9% to 128,000 on an annual basis. More than one in five unemployed people had been looking for work for 27 weeks or more in June, a significant increase from June 2024.
Statistics Canada said the jobless rate in June remained low at 0.5%, in line with historical averages except during recessions. Tariff-exposed sectors such as transportation and manufacturing have shown signs of stress in the three months to May.
Employment in the transportation sector fell by 3,400 in June, while manufacturing increased by 10,500.
The largest increase was in wholesale and retail trade, with a jump of 33,600 jobs. The health care and social assistance sector added 16,700 jobs, while the agriculture sector lost 6,000 jobs.
The labour force participation rate (the ratio of employed to unemployed individuals to the total population) rose to 65.4% in June from 65.3% in May.
Average hourly earnings for full-time workers, a key metric the Bank of Canada monitors to gauge inflationary pressures, rose 3.2% to C$37.22.
