Jobless rate matches 30-year low
Big gains come in full-time positions
Ontario's rate declines to 6.5%
STEVEN THEOBALD
BUSINESS REPORTER
Another wave of full-time hiring in June has helped drive Canada's unemployment rate back to a low posted only twice before in 30 years.
A total of 14,200 net new jobs were created last month, but a gain of 52,200 full-time positions more than offset a decline of 38,000 part-time positions, Statistics Canada reported yesterday. In the past three months, the economy has increased full-time jobs by 125,100.
"The Canadian economy has been sputtering a tad of late, but the labour force is still in great shape," said Eric Lascelles, an economist with the Toronto Dominion Bank. "There is just no question about it."
Canada's unemployment rate dipped to 6.7 per cent, from 6.8 per cent in May, returning to the low reached in March 1976 and again in June 2000, when the economy was posting blistering growth. Moreover, all of the job growth was in the private sector. Governments shed 5,000 employees last month.
Hiring was concentrated among goods producers, led by 20,700 construction workers. Even the battered manufacturing sector added 6,100 people to payrolls, rekindling hopes the worst of the impact of the stronger currency is over.
Most service providers eked out small gains, though 18,700 jobs were shed in transportation and 13,600 in retail and wholesale trade.
Ontario employment rose by 6,900, enough to shave a tick off the province's jobless rate, now at 6.5 per cent. Despite being the most vulnerable to the strong Canadian dollar, the province managed to create 63,000 jobs in the first half of the year, a 1 per cent increase.
Pessimists on Bay Street, increasingly out on a limb, trumpeted the fact that the total net jobs increase was below expectations, falling roughly 5,000 positions short.
Forecasters, however, rarely come particularly close on jobs and are doing well to just get the positive or negative sign right in the notoriously difficult-to-predict area.
CIBC World Markets economist Warren Lovely acknowledged that the economy probably performed better than expected in the second quarter but said growth will cool going ahead.
Moreover, he stressed in an email to clients that labour force participation, or the number of people actively seeking work, is behind the declining jobless rate.
"Discouraged job seekers have accounted for a falling joblessness of late, and we expect (yesterday's) reading to be the best Canada will see for some time," Lovely wrote.
Labour force participation, running at a 67.2 per cent rate in June, is still within half a percentage point of the all-time high and well above the peak of 2000, when the economy was booming, countered Doug Porter, deputy chief economist at BMO Nesbitt Burns.
Critics can't claim the strong June report is a one-month wonder, Porter added.
"On average, we have added more than 40,000 full-time jobs in each of the last three months. That is a very strong performance."
That performance may be strong enough to persuade the Bank of Canada to surprise many and hike its trend-setting overnight rate on Tuesday, when the central bank next sets monetary policy, said Clément Gignac, chief economist at National Bank Financial.
In fact, yesterday's data, combined with a report on Monday showing manufacturers are finding it increasingly difficult to meet unexpected increases in demand, suggest the chance of a rate hike on Tuesday is about 35 per cent, Gignac said.
"Next week's meeting is not a non-event," he said. "The output gap may be shrinking faster than the Bank of Canada predicted."
Also yesterday, the United States' labour department reported the American jobless rate fell to 5 per cent in June, from 5.1 per cent the previous month.
A total of 146,000 workers were added to payrolls, disappointing forecasters, who on average predicted an increase of 200,000.
The strong jobs data helped the Canadian dollar extend its winning streak to three days. It ended yesterday at 82.01 cents (U.S.), up 0.63 cents.
The currency also benefited from the foreign-exchange market's disappointment that the U.S. jobs numbers for June came in lower than expected, said Jeremy Friesen, senior currency strategist at RBC Capital Markets.
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