Canada’s

unemployment rate

declined to 6.9 per cent in June, while the economy added 83,000 jobs, the bulk of which was in part-time work.

Canada’s jobless rate has been on a steady climb this year since U.S. President Donald Trump started his trade war, but June’s unemployment rate marks the first decline since January,

Statistics Canada said on Friday.

In May, the unemployment rate peaked at seven per cent, its highest point since 2016 outside of the pandemic.

Economists had expected the jobless rate to rise to 7.1 per cent.

“Given the uncertainty hanging over the Canadian economy, many (including us) will be skeptical of this report,” said Bank of Montreal economist Benjamin Reitzes, in a note. “Even so, it appears that the economy is hanging in there for now, pending the result of ongoing trade negotiations.”

Employment increased by 34,000 in retail and wholesale trade and by 17,000 in healthcare and social assistance. Manufacturing, a sector that has been impacted the most by trade uncertainty, also added jobs during the month. Private sector employment increased by 47,000 and the public sector increased by 23,000.

Statistics Canada said the layoff rate in June was unchanged from a year ago and remained low relative to historic averages outside of recessionary periods.

The June jobs numbers is the last look the

Bank of Canada

gets at the labour market ahead of its

interest rate decision

on July 30. The central bank decided to pause its policy rate in April and June, citing ongoing trade uncertainty with the U.S. and hotter-than-expected core inflation as the main reasons.

That uncertainty is likely to persist, with

Trump this week threatening

to impose a 35 per-cent tariff on Canadian goods starting on Aug 1. The U.S. president has also threatened a 50 per-cent tariff on copper, putting pressure on another Canadian industry. Prime Minister Mark Carney said Canada will work towards the revised deadline of Aug. 1 for a trade arrangement with the U.S.

Last month, Bank of Canada governor Tiff Macklem said a trade deal between the U.S. and Canada remained “critical” for jobs and growth and warned consumer prices would likely rise if tariffs are not lifted.

Economists think Friday’s job numbers will keep Canada’s central bank on the sidelines at its next meeting.

“The Bank of Canada gets its next kick at the can on July 30th,” said Leslie Preston, senior economist with the Toronto-Dominion Bank, in a note. “Today’s jobs report is another tick in the resilience tally, but next Tuesday’s June inflation report is likely to be the bigger factor in the bank’s deliberations, given recent hotter-than-expected inflation readings.”

The employment rate, the proportion of the population 15 years and older who are employed, rose by 0.1 percentage points to 60.9 per cent during the month.

Total hours worked rose by 0.5 per cent in June and were up 1.6 per cent compared to last year. Average hourly wages increased by 3.2 per cent on a year-over-year basis in June, following an increase of 3.4 per cent in May.

Employment rose in Alberta, Quebec, Ontario and Manitoba, while Newfoundland and Labrador and Nova Scotia lost jobs. The city of Windsor, which has been particularly hard-hit by Trump’s auto tariffs, recorded the highest unemployment rate among Canada’s major cities at 11.2 per cent.

The June jobs numbers is the last look the

Bank of Canada

gets at the labour market ahead of its interest rate decision on July 30.

  • Hike in jobless rate to sway Bank of Canada to cut rates: CIBC
  • Canadians’ job security gets shakier as trade war harms growth

• Email: jgowling@postmedia.com

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.