By Promit Mukherjee
OTTAWA (Reuters) -The Canadian economy lost thousands of jobs in July, sending the share of people employed in the population to an eight-month low, data showed on Friday, as the labor market gave back substantial gains seen in the prior month.
The economy shed 40,800 jobs in the month, compared with a net addition of 83,000 jobs in June, taking the employment rate, or the percentage of people employed out of the total working-age population, to 60.7%, Statistics Canada said on Friday.
The loss of jobs was concentrated among permanent employees, StatsCan said. The unemployment rate however remained steady at a multi-year high of 6.9%.
Analysts polled by Reuters had forecast the economy would add 13,500 jobs and the unemployment rate would tick up to 7%.
U.S. President Donald Trump’s sectoral tariffs on steel, aluminum and autos have hit the manufacturing sector hard, and this has rippled across other sectors, reducing the hiring intentions of companies, the Bank of Canada has previously said.
But the effects of tariffs have not yet spiraled into a total meltdown of the jobs market and employment in some areas has held up well, the data showed.
Overall, there has been little net employment growth since the beginning of the year, StatsCan said, but clarified to say that the layoff rate was virtually unchanged at 1.1% in July compared with 12 months earlier.
The bulk of the job losses occurred among younger age groups, primarily those between 15 and 24 years, whose unemployment rate edged up to 14.6%, the highest since September 2010 excluding the pandemic years of 2020 and 2021.
POLICY RATE
The youth unemployment rate is usually higher than the country’s average.
The employment rate amongst this group, which accounts for around 15% of the total working-age population, sank to 53.6%, the lowest since November 1998 if the pandemic years are excluded.
The Bank of Canada kept its key policy rate unchanged last week, partly due to a strong labor market, which has not shown signs of widespread weakening, but indicated it might reduce lending rates if inflation stays under control and economic growth weakens.
Money market bets show odds of a rate cut at the next monetary policy meeting on September 17 at 38%, up 11 percentage points from Thursday.
The Canadian dollar was trading down 0.07% to 1.3753 against the dollar, or 72.71 U.S. cents.
The biggest decline in employment in July was observed in information, culture and recreation, which lost 29,000 jobs, followed by 22,000 in construction and 19,000 in business, building and other support services.
Employment rose in transportation and warehousing by more than 26,000, or a jump of 2.4%.
The average hourly wage of permanent employees – a gauge closely tracked by the Bank of Canada to ascertain inflationary trends – grew by 3.5% in July to C$37.66 per hour, against a 3.2% increase the month before.
(Reporting by Promit Mukherjee; Editing by Dale Smith and David Holmes)
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