Canada: Unemployment Rate rises to 5.5% in July as expected; Employment drops by 6,400

The data published by Statistics Canada revealed on Friday that the Unemployment Rate rose to 5.5% in July. This reading came in line with market expectation. The Participation Rate decreased from 65.7% to 65.6%. 

Further details of the publication revealed that the Net Change in Employment was negative by 6,400, worse than analysts' estimate of a 21,100 positive change and follows a 59,900 increase in June. The annual wage inflation arrive at  5% in July. 

Later on Friday, more Canadian data is due with the Ivey Purchasing Managers Index, expected to rise from 50.2 to 52.7 in July.  

Key takeaways from the report: 

"Employment was virtually unchanged in July (-6,000; -0.0%), as the number of people working full-time and part-time held steady. From January to July, monthly employment growth has averaged 22,000."

“On a year-over-year basis, average hourly wages rose 5.0% in July, following increases of 4.2% in June and 5.1% in May.”

“Total hours worked were virtually unchanged in July and were up 2.1% on a year-over-year basis.”

“The unemployment rate rose 0.1 percentage points to 5.5% in July, following increases in May (+0.2 percentage points) and June (+0.2 percentage points). This was the first time the unemployment rate had increased for three consecutive months since the early months of the COVID-19 pandemic.”

There were fewer people employed in construction (-45,000; -2.8%), public administration (-17,000; -1.4%), information, culture and recreation (-16,000; -1.8%) as well as in transportation and warehousing (-14,000; -1.3%). Employment rose in health care and social assistance (+25,000; +0.9%), educational services (+19,000; +1.3%), finance, insurance, real estate, rental and leasing (+15,000; +1.1%) and agriculture (+12,000; +4.6%).

Market reaction: 

After an initial decline, the USD/CAD turned to the upside reaching two-month highs slightly below 1.3400. The US also reported jobs data.