June jobless rate rises as economy slows

Fri Jul 11, 2008 7:43am EDT
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By Louise Egan

OTTAWA (Reuters) - The unemployment rate rose to its highest in over a year in June as employers shed full-time workers, confirming a long-awaited slowdown in the labor market as the economy slows.

Statistics Canada said the unemployment rate ticked higher to 6.2 percent from 6.1 percent in May, a level not seen since April of last year but still near a 30-year low. The economy lost 5,000 jobs in June, the biggest decline since August 2006 but considered by the agency to be a flat reading due to statistical error.

The weakness, while slightly worse than expected, is unlikely to sway the Bank of Canada from its inclination to keep interest rates steady next week, analysts said.

Canada's labor market had consistently surprised markets with its strength during much of 2007 and early 2008. But June marked the fourth consecutive month of comparatively weaker job gains and the news pushed the Canadian dollar to a session low against the U.S. dollar.

"Overall the labor market is losing strength. I think that's the big picture here and maybe the best way to look at it is just the gradual uptick in the unemployment rate since the start of the year," said Doug Porter, deputy chief economist at BMO Capital Markets.

"I don't think it's weak enough to get the bank to change their bigger view of the economy."

Wages rose a sharp 4.3 percent year-on-year in June but were down from 4.6 percent in May, according to the average hourly salary of permanent employees, the agency said.

The employment data fell below the expectations of analysts surveyed by Reuters who had expected a gain of 10,000 jobs and an unchanged jobless rate.   Continued...