For Poloz, latest jobs report not enough to sway the rate pendulum

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If Bank of Canada Governor Stephen Poloz was looking for a good reason not to cut interest rates at the central bank's policy meeting next week, he didn't find it in the June employment numbers.

Statistics Canada's Labour Force Survey showed that the country shed a modest 6,400 jobs in June. It's the last major Canadian economic release that the Bank of Canada will see before making its decision on interest rates next Wednesday; given the persistent weakness in other recent economic indicators, many pundits were saying before the employment report that Mr. Poloz would have to see strong job numbers to convince him that a rate cut isn't necessary to prop up the slumping economy.

Were these strong job numbers? Actually, in some ways, yes. But not in enough ways to sway the central bank boss one way or the other.

Despite being a negative June reading, it's actually a pretty decent result, coming on the heels of a big 59,000-job jump reported in May. The May gain was so far above expectations that some observers (okay, me) wondered if the survey, which comes with a substantial margin of error, was simply wrong in that month; at very least, most pundits predicted at least a partial reversal. The fact that the country appears to have held onto most of those May gains in June does imply that the May data weren't a statistical head-fake after all, and that there is some decent underlying strength in place.

And then there's the 65,000-job surge in full-time employment, the biggest in more than two years. Full-time jobs have now risen three months in a row, eight of the past 11, and have gained nearly 200,000 in the past eight months. That's a pretty solid trend, with the big June number capping it.

But there are too many eyebrow-raising numbers in the June report to feel entirely comfortable with it.

While full-time jobs surged, part-time jobs fell off a cliff – a 71,000 drop, the worst in more than four years. On a percentage basis, that's 2.1 per cent of all part-time jobs, evaporated in one month. Are we to believe that a whole bunch of people on part-time hours shifted to full-time in the month? It's possible. But it suggests that actual creation of new full-time jobs may not be as impressive as the big number – and it may be that both the full-time and part-time moves have been exaggerated in this particular survey sample.

Meanwhile, private-sector job creation – considered a hallmark of a healthy economy – took a significant step backward in June, dropping by 26,000. The private sector had added 100,000 jobs in the previous three months, so a pause in June isn't all that alarming. Still, the sizable retreat hardly signals a labour market firing on all cylinders.

One of the key sectors that the Bank of Canada has been looking to for leadership in the economic rebound this year – manufacturing – also looked questionable. It lost 7,200 jobs in June – a month in which the end of a major retooling shutdown at FCA Canada's Windsor auto plant should have provided a nice influx of returning workers. Again, it's a number that doesn't instill confidence, and raises questions about whether the solid manufacturing gains in May were a statistical anomaly.

And don't even get me started on the 33,000-job plunge in Quebec in June, all in part-time jobs. That's figure that's somewhere between hard-to-explain and flat-out weird.

Put it all together, and the June employment report doesn't weaken the case for a labour market recovery, nor does it do enough to strengthen it. That doesn't mean that the job numbers will convince the Bank of Canada to cut rates next week. But if the central bank was looking for a big win on the jobs front to take a rate cut off the table for this meeting, this ain't it.