Canada jobless rate ticks up to 5.5% in July

Canada shed 6,000 jobs in July, pushing up the unemployment rate 0.1 percentage points to 5.5 per cent — marking a third consecutive monthly increase, the government statistical agency said Friday.

Analysts were expecting a modest increase in new jobs following average monthly gains of 22,000 since the start of the year.

"This was the first time the unemployment rate had increased for three consecutive months since the early months of the Covid-19 pandemic," Statistics Canada said in a statement.

According to the agency, there were fewer people employed in construction (-45,000), public administration (-17,000), information, culture, and recreation (-16,000) as well as in transportation and warehousing (-14,000).

Employment rose in health care and social assistance (+25,000), educational services (+19,000), finance, insurance, real estate, rental and leasing (+15,000), and agriculture (+12,000).

Economists noted that demand for work was outpacing job creation amid soaring immigration that helped push Canada's population to 40 million in June.

"Job growth was flat, but controlling for a boost to the Canadian population, labor markets softened more significantly under the surface," RBC Economics analyst Carrie Freestone pointed out.

Desjardins analyst Royce Mendes said in a research note, "It's clear that underlying momentum in the economy is slowing" and that "the Bank of Canada's efforts to rebalance the labor market are working."

"As a result, today's data reinforce our view that the central bank is done raising rates for this cycle," he said.

The central bank last raised its key interest rate by 25 basis points to five per cent in July.