The job market surprised positively in June. The economy with a trade war to finish with the United States added 83,000 jobs, its highest level in six months.
While most economists expected an increase in the unemployment rate, it fell 7 % in May to 6.9 %. This is the first drop in the unemployment rate in three months. In Quebec, the unemployment rate jumped 0.5 %, to 6.3 %, but it is the increase in the number of people who are the cause when the economy added 23,400 jobs in June.
According to Statistics Canada, employment in the private sector is currently at a record level, despite uncertainty linked to current American customs duties. How to explain that?
It may be too good to be true, say economists from the National Bank, who have long believed that Statistics Canada overestimates job gains.
In its calculation, the federal body estimates the number of permanent residents using a mobile average over 12 months, while the number of permanent residents has recently decreased. This calculation may not give a fair portrait of the current reality, argue Mathieu Arseneau and Kyles Dahms in their analysis of the figures published on Friday.
Another portrait of the job market, that of the employment survey, remuneration and working hours (EERH), should give a completely different story, according to them.
The EERH is based on employers’ data. Its latest data dates back to April, and it displays four consecutive months of contraction, the economists note.
Successful or not, job creation in Canada is likely to be ephemeral, believes Tony Stillo, director for Canada of the Oxford Economics firm.
“The surprising vigor of the labor market in June will not resist the intensifying trade war,” he said. We believe that the Canadian economy has entered a recession that will spread from the sectors most exposed to customs duties to the entire economy. He argues that the unemployment rate could reach 7.5 % in Canada at the end of the year.
Even if the job has not undergone the apprehended tumble, the labor market has been weakened considerably for a year, said economist Nathan Janzen, of the Royal Bank.
“And commercial risks remain,” he notes, now that Canada has been added to the list of countries facing a new salvo of customs duties from 1is august. »»
It is in Ontario, where the automotive industry is concentrated, that the effects of the trade war are already felt more. The unemployment rate in Windsor reached 11.2 % in June, the highest rate among Canadian metropolitan regions. The unemployment rate is 7.8 % in the province.
In June, most of the jobs created were part -time jobs, concentrated in the retail and health and social services sector. Salaries growth continues to slow down, with an average hourly wage increase of 3.2 % last month.
This slowdown is good news on the inflation front, which could have remained stable in June, according to most economists. The stability of the job market and inflation should encourage the Bank of Canada to keep its key rate unchanged for the third consecutive time at its next decision at the end of the month, according to economists from the National Bank.
At Desjardins, there is rather a drop in the key rate. “The publication of inflation figures scheduled for next week will play a more decisive role in the decision of the Bank of Canada,” said the economists of Desjardins.