Canada's June job creation smashed expectations with 83,100 new positions instead of the flat reading economists predicted, lowering the unemployment rate for the first time since January during a period the central bank said the U.S. trade war could bring a recession.
The unemployment rate declined by a tenth to 6.9%, Statistics Canada said Friday from Ottawa, instead of the increase economists predicted. The jobless rate remains elevated, coming down from the highest since 2016 outside of the pandemic.
Hours worked rose 0.5% on the month and 1.6% from a year ago to defy bets GDP is shrinking and average wages climbed 3.2% from June of last year.
Job gains were led by retail and wholesale, up 33,600 in a month where several economists said the bankruptcy of Hudson's Bay stores would be a drag. The department store category declined but is a small part of retail employment, according to a StatsCan official.
Another surprise is manufacturing jobs climbing 10,500 or 0.6% in June, following two prior declines as U.S. tariffs took effect. Unemployment in the auto manufacturing hub of Windsor, Ontario, across from Detroit was still the highest among Canadian cities at 11.2%.
The Bank of Canada's July 30 rate decision will still be heavily influenced by Thursday night's post from U.S. President Donald Trump that he intends to boost tariffs on Canada to 35% on Aug. 1. Governor Tiff Macklem in April laid out two scenarios based on the intensity of the trade war rather than a regular forecast, and has held rates for the last two meetings after seven prior reductions.
Canada's inflation report later this month will also shed light on whether core inflation is slowing back inside the target range and if tariffs are raising consumer prices.