Preview: Due August 7 - Canada August Employment - Another positive month, but tariffs a risk going forward
We expect Canadian employment to increase by 20k in July, a third straight gain, similar to June’s 18.2k though well below May’s 87.8k which was correcting preceding weakness. We expect unemployment to match June’s 6.5% but before rounding to fall to 6.451% from 6.498%.
The economy appears to have returned to growth in Q2 and is likely to have started Q3 with some momentum, though this is threatened going forward by fresh US tariffs.
June’s employment detail was mixed, but with weakness in goods, correcting from a strong May, and strength in services, despite a correction lower in the public sector after a rise in May. In July we expect goods to decline by 5k, fully in other goods, with manufacturing and construction flat. All three would be in line with their three month averages. June saw services up by 61.8k, led by wholesale and retail at 16.4k and accommodation and food services at 14.7k, both potentially supported by the World Cup. We expect these two components to both decline by 5k in July with the remainder of services slightly firmer than June at 35k, with 5k of that from a bounce in the public sector.
Most recent months have shown full time work outpacing part time, though June was an exception with the former up by only 0.6k while the latter rose by 17.5k, possibly supported by the World Cup. In Juley we expect a 25k rise in full time work and a 5k decline in part time.
We expect the labor force to rise by 10k, slightly stronger than in May and June, keeping unemployment at 6.5% though before rounding we expect it to fall very close to 6.45%, consistent with a rate that is now trending slowly downwards, if still with plenty of labor market slack remaining, and participation at 65.0% for a fourth straight month. We expect yr/yr growth in the hourly wage for permanent employees to slip to 3.4% from 3.7%, assisted by an acceleration on July 2025 dropping out.