Canada Employment Preview: Banks expect to see early cracks in the labour market

Canada’s employment data for June will be reported by Statistics Canada on Friday, July 7 at 12:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at five major banks regarding the upcoming jobs figures. 

The North American economy is expected to have added 20K jobs vs. -17.3K in May, with the Unemployment Rate expected to rise a tick to 5.3%. Meanwhile, the Participation Rate is expected to have remained stable at 65.5%.

TDS

We look for employment to rise by 25K, leaving the UE rate stable at 5.2%. Services should drive hiring, while wage growth is expected to fall 0.6pp to 4.5% YoY.

RBC Economics

We still look for a 20K increase in employment in June. But with population growth also surging, this won’t be enough to prevent another uptick in the unemployment rate to 5.3%.

NBF

After a slight hiccup the prior month, we expect job creation to have resumed in June. But an expected gain of 20K may not be enough to prevent a further rise in the unemployment rate in a context where the labour force is growing at a strong pace. Indeed, we expect the jobless rate to increase from 5.2% to 5.3%, assuming that the participation rate rises by a tenth to 65.6%. 

CIBC

We expect a modest rebound of 20K in June which, with a slight recovery in participation as well, would keep the unemployment rate steady at 5.2%. Wage growth could have edged down slightly, but will have remained firm at around 5% YoY. Hours worked have been starting to lag the trend in employment again recently, partly because excess hours lost due to illness have been climbing again, and that trend could have continued into June. While a rebound in June may be enough to prevent the unemployment rate from rising further, the underlying trend within the labour market still appears to be weakening. We continue to expect that job growth for the remainder of the year will fall short of the rapid increase in population, seeing the jobless rate climb to around 6% by yearend.

Citi

We expect a modest 15K bounce-back in employment in the Labor Force Survey in June, the last key release ahead of the BoC July rate decision in a few weeks. May employment data was likely in part impacted by some technical and seasonal adjustment issues, as the decline was entirely in self-employment and corresponded with a similar decline in self-employed workers in the household employment survey in the US as well. This suggests the possibility of some common issue that could be impacting the two similar datasets in both countries in May that is unlikely to repeat.