Canada's unemployment rate fell 0.2 percentage point to a record low of 4.9 per cent in June, despite an unexpected net loss of 43,000 jobs, the government statistical agency said Friday.
This marked a fourth consecutive record low and the first decline not linked to a tightening of public health restrictions since the start of the pandemic.
Statistics Canada blamed an exodus of workers aged 55 or older from the labour force for the jobless rate drop, while job losses, it said, were driven by a decline in self-employment.
The agency also said a decline in retail jobs was moderated by an uptick in employment in construction and manufacturing.
The numbers came as a surprise to economists who were expecting tens of thousands of new jobs to be created, after recent months saw hundreds of thousands of new jobs added following a lifting of nearly all Covid-19 restrictions.
Wage growth also accelerated with the average hourly rate rising 5.2 per cent, adding pressure on inflation.
"Truth be told, this is one of the strangest Labour Force Surveys in recent memory, which is really something given the pandemic," Desjardins analyst Royce Mendes commented.
"But the story remains largely the same," he said in a research note. "With inflation sky high, the Bank of Canada needs to hike rates aggressively to get them more appropriate levels even if there are more cracks forming in the foundation of the economy."
The central bank is widely expected to increase its key lending rate by as much as 75 basis points at its next meeting on July 13.
It has gradually hiked the cost of borrowing from a record low to 1.5 per cent last month in an effort to throttle skyrocketing inflation, which hit 7.7 per cent in May.
