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Analysis team at TD Securities note that the Canadian economy shed 2.2k jobs in June, falling short of the market consensus (+10k) and TD’s forecast for more modest gains (5k).

Key Quotes

“Any notion that this was a soft print was put to rest by a sharp pickup in wage growth, with average hourly earnings for permanent employees posting their largest one-month change (+1.1%) since 2005. This helped push wage growth for permanent employees to 3.6% y/y, the highest since mid-2018, although we would note that other measures of wage growth (ie. SEPH) sit at more subdued levels.”

“The report also showed a rotation back towards private employment (+23k), following last month’s self-employed gains, and another strong month for full-time job growth (+24k). The unemployment rate ticked slightly higher to 5.5%, in line with the market consensus, although this is still down 0.2pp from April. Adding further to the upbeat tone was a 0.7% m/m increase in hours-worked which bodes well for economic activity in June.”

“The Bank of Canada will be comfortable looking past one month of soft employment data, especially with the six-month trending holding at 41k (full-time: 36k), but it will be much harder to ignore the sharp pickup in wage growth.”