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Jobs Canada's employers hit the brakes; rate move still a 'toss up'

A man, with a sign strapped to his back, uses a megaphone to attract the attention of potential employers as he hands out resumes on Bay Street in the financial district in Toronto in this file photo.

Mark Blinch/Reuters

Canadian employers put the brakes on hiring last month, trimming private-sector positions and part-time jobs, particularly in Quebec.

Employers shed 6,400 jobs in June and the unemployment rate held steady for the fifth month in a row at 6.8 per cent, Statistics Canada said Friday, as fewer people looked for work.

Employment has swung between monthly job losses and gains all year, with a broader trend showing a deceleration in hiring. Employment growth slowed to 33,000 in the second quarter, after job gains of 63,000 in the first three months of the year, the agency noted. The economy, meantime, contracted in the first quarter and a recent raft of weak data – from monthly GDP to export numbers – has led some economists to say the county likely fell into recession in the first half of 2015.

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The report is the last major economic release before the Bank of Canada decision on interest rates Wednesday. Economists' opinions are split over whether the central bank will cut rates amid a weaker-than-expected GDP growth and global economic uncertainties.

"Job creation slowed in recent months, and this is in addition to the slowing pace of exports, investment and real GDP," Joëlle Noreau, senior economist at Desjardins Group, adding that these factors bolster the case for a rate cut.

Still, the jobs report offered a mixed picture, as some signs – such as gains in full-time work and wage growth – point to resiliency. "The persistent strength in full-time jobs and wages suggests that income support remains surprisingly healthy from the labour market," said Douglas Porter, chief economist at BMO Nesbitt Burns – making next week's rate decision "very much a toss-up."

Growth in average hourly wages for permanent workers quickened to 3.1 per cent, year over year, from 2.9 per cent in May. Another sign of strength is total hours worked, up 2.1 per cent from a year ago.

Firm wage growth and the bump in full-time positions suggest "the impacts of the slowdown in growth over the first half of the year are not feeding through meaningfully to the labour market," Toronto-Dominion economist Brian DePratto said.

That said, "as employment tends to have a lagged relationship with growth, we expect to see divergence in the coming months between relatively weak employment data and the anticipated rebound in GDP growth in the second half of the year."

Private firms cut jobs last month, while the public sector added to head count. Among sectors, the manufacturing, business services and accommodation and food-services sectors shed positions while employment rose in public administration and professional services.

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"It's hard to see the trend of strong public-sector job creation continuing given the message of restraint at the provincial level," said Avery Shenfeld, chief economist at CIBC World Markets.

Over the past year, employment has grown by 1 per cent, driven by full-time gains. In June, full-time employment rose by 64,800 and part-time jobs fell by 71,200.

Among provinces, employment fell in Quebec and New Brunswick but rose in British Columbia and Newfoundland. Ontario and Manitoba have led job growth over the past year.

Toronto's jobs market is "smokin'," BMO's Robert Kavcic said. Canada's largest city has added 95,000 jobs so far this year – "one of the best six-month tallies on record," he said, cutting its jobless rate to 6.9 per cent.

In Alberta, the jobless rate fell to 5.7 per cent, despite a raft of layoffs in the oil patch. Still, the unemployment rate has climbed over the past year, while employment-wise the province saw "no growth" in the first six months of this year, the agency said.

Young people saw job declines. Employment fell among youth by 26,000 and levels are little changed from a year ago. The youth unemployment rate fell to 12.9 per cent from 13.2 per cent as fewer of them participated in the labour market.

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Canada's jobless rate is higher than in the United States. This country's unemployment rate, adjusted to U.S. concepts, was 5.8 per cent in June, compared with 5.3 per cent in the United States – the lowest in more than seven years.

Economists had expected a decline of 10,000 positions last month and a jobless rate of 6.9 per cent.

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