Canada printed a dismal jobs report for June, as the economy lost 9.4K jobs during the month instead of showing the estimated 20.7K increase. To top it off, the unemployment rate rose from 7.0% to 7.1%. Is the Canadian economy and the Loonie in for more weakness or are we just seeing the tip of the iceberg?
Components of the employment report showed that the decline was spurred by a large reduction in part-time workers. Although full-time employment climbed by 33.5K, part-time positions slipped by 43K and resulted to a net negative jobs figure. Apparently, part-time hiring is affected by summer employment among students from May to August, so this might have been skewed by seasonal factors.
Digging deeper into the numbers reveals that hiring in the business, building, and other services sectors fell by 27.2K while the agriculture industry marked a 14.5K decline in employment. The construction sector showed a 32K pickup in hiring after reporting subdued gains in the past few months.
On a brighter note, the labor force participation rate held steady at 66.1% for the third month in a row, indicating that Canadians are still staying in the labor force and not giving up looking for full-time work. Aside from that, average hourly wages chalked up a 1.9% year-over-year increase in June, an improvement over the previous month’s 1.6% rise.
A quick review of Canada’s recent jobs releases indicates that this is the third time the economy posted a negative monthly reading so far this year. On an annualized basis, employment growth is up by only 0.4% – its slowest pace of increase since February 2010.
However, several analysts remarked that the Canadian labor situation isn’t as bad as the headline figures suggest. After all, the drop was mostly caused by a sharp decline in part-time positions and other labor indicators such as the participation rate and wage growth seem to indicate stability.
How this might affect Loonie price action still hinges on how BOC Governor Poloz and his men take the latest labor news, alongside the recent economic figures from Canada. Data has been mixed, but it appears that underlying components still reflect positive economic prospects. Do you think the Loonie can be able to rebound sooner or later?