Canada Sheds Jobs for Second Month as Labor Force Shrinks

Canadian employment unexpectedly fell for a second straight month in July as workers dropped out of the labor force, Bloomberg News reported. The country shed 30,600 jobs last month, Statistics Canada reported Friday in Ottawa, a surprise negative reading compared to the 15,000 gain anticipated by economists. Still, the unemployment rate held at a record low 4.9% as the labor force shrank by a similar amount. The employment drop last month adds to a loss of 43,200 jobs in June, marking a sudden stop to Canada’s yearlong labor market boom. The country created more than 1 million jobs in the 12 months through May, before the two-month slump began. The question now is whether the slowdown is being driven by labor supply factors or by a weakness in underlying demand brought on by the initial impact of higher borrowing costs. The mix is important to the Bank of Canada, which has been tightening policy aggressively in part because of worries that demand for labor has far outpaced supply. The data, however, continue to point to an extremely tight labor force, even with the fall in employment. Labor force participation rates fell for a second month, dropping to 64.7% from as high as 65.4% in March. The number of Canadians in the labor force fell by 27,000, mostly women, adding to the 97,500 drop in June. The average hourly wage rate was up 5.2% from a year ago, unchanged from June and matching the fastest increase in records dating to 1997, outside of the pandemic. Read more.