Canada’s Job Market is On Fire — Take That, Trump!

• Canada created 83k jobs with strong details last month…

• ...and 144k jobs ytd that are understated

• Canadians are spending it at home, buoying services…

• ...affording the Carney administration support for patience in trade talks

• BoC likely to remain on hold on July 30th…

• ...as our BoC hold view is working very well

• Canada jobs m/m 000s / UR %, SA, June:
• Actual: 83.1 / 6.9
• Scotia: 15 / 7.0
• Consensus: 0.0 / 7.1
• Prior: 8.8 / 7.0

Canada’s job market is on fire (chart 1). Take that, Trump, we’re just tougher and more resilient north of the border. The caveat is that the strong gain makes it even less likely that the Bank of Canada embraces further easing anytime soon. We all ate humble pie on this one, but our small victory for a Friday was to be on the more optimistic side of consensus for the job gain and unemployment rate.

83,100 jobs were created in Canada last month and the details were robust. As for dismissing this as statistical noise in a household survey, be careful. Resist. 95 times out of 100 in repeated survey sampling, this gain of 83k would have been between 26k and 140k based on a +/-57k 95% confidence band estimated by Statcan using the report’s standard error. So notwithstanding statistical noise, it still would have beaten consensus on the low end of that range and utterly destroyed it on the upper end.

144k jobs have been created year to date in 2025. If anything, that's understating the gains because as previously argued I don't believe the SA factors that Statcan applied in January to April that artificially tamped down job growth due to the recency bias in how the SA factors were calculated.

Now for details, then followed by a comment on the Bank of Canada.

Sector breadth was decent (chart 2). Most of the gain was in services (+73k), with goods up 10k and driven by manufacturing (+10.5k) which was surprising at least to me. Within services, gains were registered in wholesale/retail +33.5k (all retail, +39k), health care and social assistance (16.7k), professional/scientific/technical up 11.9k and other sectors. 

The unemployment rate fell to 6.9% from 7.0% because the job gain exceed the gain in the labour force (+61k). I don't get the labour force numbers. Tighter immigration policy is showing up in population figures that have reversed, but not yet in the labour force. Maybe that indicates greater entry into the labour force by the domestic population either due to a wage-pull effect, or because of pressures on household finances. The labour force participation rate edged up a tick to 65.4%.

Most of the jobs were part-time (+69.5k) versus full-time (+13.5k). That’s the one dent, but still, even just the full-time gain would have beaten consensus and part-time jobs are not to be dismissed in the modern workforce.

Payrolls led the way, up 70.1k, and most of that was in private sector payrolls (+46.6k) as public sector payrolls were up by 23.4k and not because of civil servants (+0.8k) as opposed to other public sector roles like the health, education, and social services sectors.

Self-employed jobs were up 13.1k.

Hours worked were up by 0.5% m/m SA (chart 3), which is good for June GDP defined as hours times labour productivity. Hours were up 2.0% q/q SAAR in Q1, then 1.3% in Q2 which is slowing but still indicating some resilience in GDP (chart 4). Hours were held back again by weather last month (chart 5).

Wages were up 2.7% m/m SAAR which is slower than 6.9% previously, but that’s not surprising (chart 6). The three-month moving average for wage growth is 4.4% m/m SAAR, or more than double the BoC’s 2% inflation target.

Youth employment was up 8.8k but most jobs created were in the 25+ age category. Men 25 and up gained 52k jobs, while women aged 25 and older gained 22.2k.

The 83k gain was less distorted by the June seasonal adjustment factor this time compared to last June's record SA factor (chart 7). In other words, the SA factor is not inflating the gain in jobs as much as I had thought it might. In fact, as chart 8 shows, the job gain was robust at virtually any reasonable June SA factor you could have chosen.

There was decent regional breadth. Employment in Ontario was up 21.2k, Quebec was up 23.4l, Alberta gained 30k, BC was up 5k, and the rest was spread out.

RESILIENT CANADIAN SPITFIRES ARE SPENDING IT HERE

So what gives? Why are employers throwing caution to the wind amid trade turmoil and hiring in droves? One theory is that it’s a rush to produce before tariffs really bite, but that theory doesn’t explain the concentration of job gains in services. That begets another theory, that the domestic economy is healthier than the external trade sector and most services are less tradeable or not tradeable at all and therefore less directly exposed to trade wars.

Another theory is that Canadians are just spending it here. Chart 9 shows activity at restaurants. Chart 10 buttresses this point albeit with lagging data only available to April but that shows strong spending at bars and restaurants as one indication of staycation spending. Instead of travelling to the US during March break and summer vacations, Canadians are spending it here and keeping jobs here. 

BOC TO REMAIN ON HOLD

Forget about that July 30^th cut. OIS markets shaved pricing for the upcoming meeting from about 8bps of a 25bps cut to half that which is trivial.

Optically, it would be exceedingly difficult for them to cut after year-to-date and June jobs numbers like these. GDP will continue to be distorted by inventory and import swings and hence tough to read, but under the hood GDP figures could be reasonably resilient. The core inflation trend remains far too hot even though I wouldn't be surprised to see next Tuesday's trimmed mean and weighted median figures ebb off the 4½% m/m SAAR pace in May, although tariff effects are a wild card. TM and WM CPI exclude tariff direct effects, but not the incidence effects.

Our BoC hold view for this year after the March cut has paid off very well. Markets had the BoC policy rate priced at 2–2.25% by year end back in March after the last cut and that's now 2.5%, or just -25bps from here. I'd still lean toward wiping it out entirely, but obviously we're in a rapidly shifting environment given erratic US trade policy, more data, Canada's Fall budget etc.

And yet key may be that the BoC is unlikely to have any clarity on two key pieces of information by the time of its July 30^th decision including updated forecasts in the MPR. That might lead them to continue to boycott a base case forecast in favour of scenarios. They probably won't know the outcome of trade talks by the July 30^th decision given the extension to August 1^st which itself could well be pushed out again. They also won’t know what’s in the Fall budget by the end of this month. How can you adjust policy when you haven’t a clue what trade and fiscal policies might unfold? That merits keeping their powder dry with data to date not indicating any great reason to rush a decision.