Canada's economy unexpectedly lost a net 2,800 jobs in July, as an increase in full-time employment was offset by a decrease in part-time employment, while the unemployment rate remained at a 30-month high of 6.4%, according to data released on Friday.
Analysts polled had forecast a net increase of 22,500 jobs and the unemployment rate would rise to 6.5% from 6.4% in June.
The growth rate of average hourly wages for regular workers slowed to an annual rate of 5.2% from 5.6% in June, based on data from Statistics Canada. The rate of wage growth, which is closely monitored by the Bank of Canada (BoC) for its impact on inflation, returned to 5.2% in May after a surge in June.
July was the second straight month of job losses and added signs of easing in Canada's labor market, underpinning the case for the central bank to cut interest rates again at its next announcement in September. The unemployment rate, which was the highest since 6.5% in January 2022, has been on an upward trend and increased 0.7 percentage points since January.
Canada's labor force participation rate also fell to a 26-year low of 65% in July.
Citing progress towards reaching its 2% inflation target, the bank has cut its key overnight interest rate in several months and said it was increasingly concerned about the possibility of weaker-than-expected growth.
Ahead of the July 24 rate cut announcement, the bank noted that economic growth has been slower than population growth, leading to oversupply in the economy and slack in the labor market.
Financial markets have priced in an additional 25 basis point cut at the next bank rate announcement on September 4, and some even see the small possibility of a 50 basis point cut.
Friday's data followed last week's dismal jobs report from the United States, which fueled fears that Canada's biggest trading partner is slipping into recession.
