Expect BoC rate hike next week, followed by a fall pause

Tuesday, 10 Jul, 2018

Across Canada, there was a healthy gain of 31,800 jobs last month, but it wasn't enough to keep Canada's unemployment rate from rising to six per cent as more people searched for work.

In an estimated labour force of 42,700, there were 39,700 employed and 3,000 unemployed, according to the survey released July 6. Ontario's unemployment rate stood at 5.7 per cent in May.

OTTAWA-Canada added more jobs than expected in June and wages continued to advance at a strong pace, bolstering expectations that the Bank of Canada will raise the benchmark interest rate next week.

"Compared with June 2017, employment increased by 215,000 or 1.2 per cent, with all the growth in full-time work".

Jobs in agriculture dropped 10.8 per cent to 21,400, while the province saw small declines in manufacturing (0.4%) and construction (0.5%). But forecasters are less bullish than they were a month ago as escalating trade uncertainty competes with expected Bank of Canada rate hikes.

The local economy added 1,200 jobs in June, the labour force swelled by 1,800 while there was an extra 600 people who claimed unemployment. The number, however, did come down from its nine-year high in May of 3.9 per cent. "We're still in a position that the Bank of Canada will tighten in July", said Andrew Kelvin, senior rates strategist at TD Securities.

Separately, Statscan said Canada's trade deficit in May grew to $2.77 billion from $1.86 billion in April. The figure for aircraft imports more than tripled to $937 million due to the purchase of several airliners from the U.S.