Unemployment rate rises to 5.4% despite job growth, BoC rate hike still on track

The unemployment rate has increased to 5.4% despite the growth in the number of jobs. However, the Bank of Canada is still expected to proceed with a planned rate hike.

In June, 60,000 new jobs were created, surpassing analysts’ expectations. However, the national unemployment rate rose to its highest level since January due to a higher growth rate in the labour force compared to employment gains.

The sectors that saw the most job gains were wholesale and retail trade and manufacturing, while construction, education, and agriculture experienced losses. Wage growth also slowed down in June. Despite some mixed results, experts believe the job data supports the likelihood of a rate hike in July.

The Bank of Canada is expected to continue with its plans for a quarter-point rate increase, despite some indications of a weakening economic environment. Factors such as increasing consumer delinquency rates, declining job openings, and slowing wage growth suggest a softer economic backdrop.

However, the strong job numbers and sustained core inflation readings have not been significant enough to change the central bank’s plans for multiple rate hikes.

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