OTTAWA, July 10 (Reuters) – Canada’s economy added a net 18,200 jobs in June and the unemployment rate edged down to 6.5%, data showed on Friday, slightly beating estimates and continuing the momentum seen in the prior month despite lingering trade uncertainty.
Analysts polled by Reuters had forecast a net gain of 10,000 jobs, following a jump of 87,800 in May, and they had estimated the unemployment rate would remain unchanged at 6.6%.
The stronger-than-expected figures added to evidence that the economy was absorbing the effects of U.S. tariffs better than initially feared, although uncertainty surrounding negotiations over the North American trade agreement remains a constraint on business investment.
The Canadian economy entered a technical recession — two consecutive quarters of economic contraction — at the end of the first quarter on an annualized basis, but GDP rebounded more than expected in April.
Economists had expected the job gains to be better in select provinces due to temporary or part-time hiring of workers as the cities of Toronto and Vancouver hosted the FIFA World Cup.
Statistics Canada said job gains in June were largely concentrated among part-time workers and in the accommodation and food services and wholesale and retail trade sectors.
Part-time employment increased by a net 17,500 jobs in June, it said, while full-time employment gains were largely unchanged.
The unemployment rate among those aged 15-24 fell to 12.7% from 13.4%.
While the unemployment rate in this category has improved in the last two months, StatsCan said it remains higher than the average of 10.8% observed during the 2017-2019 period.
The job market was weak from the start of the year until April, but has shown signs of stabilizing in the last two months. Average monthly job gains so far this year remain flat, in contrast to gains of around 18,000 in 2025 and roughly 35,000 in 2024.
The Canadian dollar rose after the data and was trading up 0.16% to C$1.4144 against the U.S. dollar, or 70.70 U.S. cents. Yields on 2-year government bonds were up 0.2 basis points to 2.408%.
MONETARY POLICY OUTLOOK
The Bank of Canada will announce its next monetary policy decision next week, with money markets betting that the central bank will hold rates steady for a sixth consecutive time.
“Two consecutive months of hiring should allow the Bank of Canada to confidently keep rates unchanged next week,” Royce Mendes, managing director at Desjardins, wrote in a note.
The North American free trade pact negotiations, however, continue to cloud the outlook and should leave central bankers cautious about trade-exposed sectors, he added.
Accommodation and food services, which account for just over 5% of total employment in the country, gained 14,700 positions in June, marking the sector’s third consecutive monthly increase.
This category was the second-biggest contributor to job growth, with the largest being wholesale and retail trade, which registered a gain of 16,400 jobs. It accounts for almost 14% of total employment in the country.
The sectors that shed the most jobs were manufacturing and construction, which together lost a total of close to 30,000 jobs.
Average hourly wages of permanent employees, a metric closely tracked by the Bank of Canada to gauge inflation expectations, grew 3.7% in June, up from 3.2% in May.
Reporting by Promit Mukherjee; Editing by Dale Smith, Ros Russell and Paul Simao
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