Wage growth cooled to 2.8%, its slowest pace in four years
Canadian employers added 75,000 jobs in July and the unemployment rate fell to a two-year low of 6.4 percent, Statistics Canada reported Friday, far exceeding the roughly 15,000 gain economists had forecast.
The increase, split between full-time and part-time work, marked the third straight monthly drop in the jobless rate and left employment 181,000 above its April level, according to the agency.
Analysts polled by Reuters had expected a net gain of about 16,500 positions.
Wage growth cooled at the same time.
Average hourly wages rose 2.8 percent year over year, down from 3.3 percent in June.
BMO chief economist Douglas Porter, said to CBC News, called that "the slowest in four years and in line with pre-pandemic trends," and noted the labour force has grown by fewer than 8,000 workers a month over the past year, so "it doesn't take much in the way of job gains to carve down that jobless rate."
Together, the data leave the Bank of Canada, which has held its benchmark rate at 2.25 percent since last October, with little pressure to move.
Money markets priced the odds of another hold at the September 2 meeting near 96 percent, as per LSEG Data & Analytics reported by BNN Bloomberg.
Markets moved on the release.
Reuters reported the loonie climbed 0.6 percent to 1.3935 per US dollar, an eight-week high, while the two-year bond yield rose 2.3 basis points to 2.951 percent.
Economists read the report as a firming but incomplete recovery.
"It's stronger growth than we were maybe anticipating a few months ago," CIBC senior economist Andrew Grantham told BNN Bloomberg in an interview, adding that more slack remains "before we really have to worry about Bank of Canada interest rate hikes."
He tied the strength to a preliminary second-quarter growth estimate of 3.4 percent, the fastest in three years.
Royce Mendes, managing director and head of macro strategy at Desjardins, said the July jobs figures show businesses navigating the trade-related uncertainty, in a note cited by Reuters.
The labour market is still not back to full health, he told BNN Bloomberg, and he does not expect a rate hike before 2027.
Capital Economics senior North America economist Ariane Curtis was blunter, telling Reuters "there was really nothing in the report to dislike."
The gains ran through the private sector.
Private-sector employment rose 58,000 and self-employment 44,000, while public-sector jobs fell 27,000, Statistics Canada said.
Wholesale and retail trade led with 21,000 new positions, followed by finance, insurance and real estate at 18,000 and professional, scientific and technical services at 17,000. Ontario drove the national total, adding 52,000 jobs.
Younger workers fared better too.
Youth unemployment held near steady at 12.6 percent, down 1.9 percentage points from a year earlier.
"Three straight months moving in the right direction is exactly how turning points begin," Indeed director of economic research Laura Ulrich said in a statement to CBC News, though she described the trend as stabilization rather than acceleration.
In an email to Benefits and Pension Monitor, Anupriya Gangopadhyay, economist at the Business Data Lab and Canadian Chamber of Commerce, said the resilience may not hold, with the impacts yet to appear in the summer data.
If tariff uncertainty persists, "we may not see the full impact on hiring and employment until later this year," she said.
That caution reflects the near-term risk hanging over the numbers.
US President Donald Trump has threatened 50 percent tariffs on a wide range of Canadian imports, set to take effect August 19, according to CBC News.
TD Economics director and senior economist Andrew Hencic said the market shows "clear signs of recovery" but warned in a note that, with those tariffs looming, "the downside risks to the economy remain."
TD expects the Bank of Canada to hold at 2.25 percent for the rest of the year.
Also writing to Benefits and Pension Monitor, Chexy chief executive and co-founder Liza Akhvledziani Carew argued the improvement has yet to reach households.
"A drop in the unemployment rate is welcome, but Canadians have been burned by good headlines before," she said. "Relief only becomes real when it shows up in bank accounts, not in a single report."
