The monthly payrolls report from Statistics Canada showed a favourable rise the number of Canadians gaining employment in June.
The Canadian Labour Force Survey showed the number of jobs rose by 45,300 in June, compared to the rise of 53,500 a month earlier; the data mashed analyst’s estimates of only a rise of 10,000 jobs.
The unemployment rate ticked down a basis point to 6.5%, beating analyst’s expectation that it would remain at 6.6%.
USD/CAD fell over half a percent, or 80 pips, following the data, despite US Dollar gains versus other pairs due to its own positive payrolls report released simultaneously as the Labour Force Survey.
GBP/USD fell even more deeply to 1.6618 at the time of writing, a move of over 1.25% due to the strengthening of the Canadian Dollar.
Older Workers Underpin Gains
Employment growth was led by older workers and the over 55’s category.
“In June, employment gains were led by people aged 55 and older, with an increase of 31,000, mostly among women. The unemployment rate for people aged 55 and older was little changed at 5.8%. On a year-over-year basis, employment for this group rose by 133,000 (+3.6%), reflecting a longer-term trend related to population aging,” said statistics Canada.
The better-than-expected Canadian jobs data in June cemented expectations that the Bank of Canada (BOC) will raise interest rates in the week ahead.
“We had held on to our October forecast for a Bank of Canada rate hike, but concede that's likely to end up off the mark, as today's jobs numbers cement the case for the central bankers to raise rates in the coming week,” said CIBC’s Avery Shenfield following the release.
“A 45K rise in June employment, coming on the heels of an even larger May gain, took the jobless rate down a tick to 6.5%,” added Shenfield.
A rise in the number of hours worked and a slight increase in full-time workers as opposed to part-time workers was a further sign of economic health.
“June's job gains were widely spread across goods and services, split evenly between paid jobs and self employment, with the only disappointment being a leaning to part time jobs, although full time jobs are still up a heady 1.7% in the past year.”
Recent rhetoric from the governor of the Bank of Canada as well as his deputy in which they have hinted that interest rates are too low has set the scene for a rate hike, which CIBC now thinks will happen in July.
“In sum, the jobs market is tightening, and not that far from what historically has been judged as full employment. Over to you, Governor Poloz,” concluded Shenfield.