05.07.24
Canadian labor market eased in June with employment contracted by 1.4K jobs and unemployment picked up to 6.4%. Employment started loosing steam in the summer of 2022 with the advent of monetary tightening as employers began reducing their business because of expensive credit. 3-months moving average for employment change dropped sharply from 130 in July 23 (see chart) and have been stabilizing at around 30 since then. Today’s contraction is in line with this dynamic as it compensates April’s rise for 90.4 jobs.
At the same time unemployment rate stopped sliding down and having bounced from the record level of 4.9, began slow mounting to 6.4% at today’s reading.
Easier labor market will help reduce inflationary pressure in the economy and as such allow BOC to continue with policy easing.
Rising unemployment if does not stop in timely manner has the potential to cause a recession as unemployed persons have less disposal money and will start reducing their consumption. Next months will be crucial to see if BOC is lucky enough to find a proper pace for policy easing so that to hit double aim – taming inflation and not allowing the economy to start contraction