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The July Canadian employment report showed a positive change in employment by 419K. Analysts at the National Bank of Canada point out the recovery continued in July as jobs rose for the third month in a row but they explain the gains recorded between May and July represent only a fraction of the 3 million jobs lost in the prior two months.

Key Quotes:

“Total employment remains down 7.0% (1.3 million jobs short) from its February peak, that is more than double the maximum drop suffered during the 2008-09 financial crisis.”

“The pace of job creation will continue to slow and some slack will likely remain for some time as several industries will continue to operate under capacity with physical distancing acting as a brake on their activities.”

“We expect consumption to be well supported in Q3 as government income support is more than compensating for labour income losses at this point. The phase out of this extraordinary stimulus combined with the end of a payment deferral period for borrowers is more concerning for the quarters ahead.”