Statistics Canada announced details about Canada’s labour market last Friday. The data was stronger-than-expected, pleasantly surprising markets, which were expecting trade tensions to weigh on labour market activity. However, excitement about the report was tempered by US President Donald Trump saying he will impose a 35% tariff on Canadian goods beginning on August 1. Concerns still persist that ongoing trade tensions could hinder labour market activity.

• The Canadian economy added 83,100 jobs over the month of June. This marked the largest month of job gains since December 2024. This surprised economists who were expecting no job gains, according to a Bloomberg survey.
• Significant increases were seen in the retail trade and health care industries. Both full- and part-time jobs increased in June. Job gains were largely concentrated in industries not highly dependent on US demand.
• Canada’s unemployment rate fell to 6.9% in June from 7.0% in the previous month. May’s 7.0% unemployment rate was the highest since 2021. The growth in average hourly wages slowed to 3.2% in June. The participation rate edged higher.
• The US appears set to impose a 35% tariff on Canadian goods beginning August 1. Despite June’s relatively robust jobs report, more tariffs could weaken Canada’s economy and weigh on the labour market. The two countries remain in negotiations, hoping to reach a deal by July 21.

June’s labour market report could have the Bank of Canada (BoC) holding steady on July 30. The BoC will need to closely monitor economic activity and inflation, which is scheduled to be announced today. As we have seen at recent meetings, the BoC is carefully navigating an environment of muted inflation and slowing economic activity with the uncertainty of how tariffs will impact prices and economic growth.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.