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Canada’s July jobs report expected to show stabilization into summer
Forecasters expect jobs to rise by 5,000 and the unemployment rate to stay at 6.5%, signaling continued cooling in excess labour-market slack as hiring demand stabilizes.
Action Forex says the upcoming July Canadian labour market report, the first for the third quarter, will be a key test of whether the gradual improvement seen in recent months continues.
The outlet’s base case is jobs increasing by 5,000, with the unemployment rate holding at 6.5%. It notes that while the unemployment rate is down from 6.9% in April, population and labour force growth have been slowing, and other labour-market indicators such as job postings have not changed much heading into July.
Action Forex also points to the expected composition of gains and wages, noting that June’s increase was driven mainly by part-time jobs, with full-time positions seeing a more modest gain. It adds that average hourly wage growth picked up slightly in June after slowing sharply in May, but could drift lower as slack remains elevated by historical standards.
On the macro side, Action Forex says recent jobs data align with modest recovery, with employment up and the unemployment rate edging lower from its April peak. It expects Canada’s exports to fall 1.2% in June, imports to rise 0.3%, and the merchandise trade balance to narrow to a C$3.1 billion surplus from C$4.2 billion in May, attributing the export decline mostly to lower oil prices.