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INSTANT VIEW-Canada adds 418,500 jobs in July, unemployment rate dips

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TORONTO, Aug 7 (Reuters) - Canada added 418,500 jobs in July, mostly in the part-time sector, and the unemployment rate fell to 10.9% as the economy continued to reopen, Statistics Canada said on Friday. Analysts in a Reuters poll had predicted a gain of 400,000 jobs and for the unemployment rate to fall to 11% from 12.3% in June.

STORY:

Market reaction: CAD/

LINK: here

COMMENTARY

RYAN BRECHT, A SENIOR ECONOMIST AT ACTION ECONOMICS

“The re-opening of the economy beginning in May has seen jobs return, but there is still a long way to go before we return to pre-COVID levels of employment. Hence, the Bank of Canada will remain in whatever-it-takes policy mode through 2021. The details of the July report track an ongoing recovery as the economy picks-up from April’s bottom.”

SIMON HARVEY, FX MARKET ANALYST FOR MONEX EUROPE AND MONEX CANADA:

“Canada’s labour market is showing good signs of recovery. There is still 1.3 million employees that are unemployed relative to pre-COVID levels and this will be interesting to gauge as the CERB (Canada Emergency Response Benefit) scheme comes to an end next month and the wage subsidy scheme takes over, and how quickly the labour market can recover before November, or if the extension is granted December, when that wage subsidy scheme is tailed off.”

“The survey...was July 12 to July 18 which lined up pretty similarly to the timing of the reopening of Ontario, so it didn’t catch the full labour market recovery for July. So it is likely under-reporting the upward surprise.”

ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES:

“As much as the headline is a bit stronger than expected it is in that ballpark of where I think the market had been looking. Obviously you would rather see a more favorable full-time, part-time split, since most of the jobs added were part-time.”

“But that was also understandable given that it was the services sector driving the recovery, in particular the food and accommodation services sector where a lot of firms are still operating at less than 100% capacity. So it makes sense that people would be brought back into the labour force part-time for now. So it is another step in the right direction. It doesn’t change much in terms of the big picture; we’ll still have low interest rates for a long, long time. But clearly more jobs is better than fewer jobs.”

DOUGLAS PORTER, BANK OF MONTREAL CHIEF ECONOMIST:

“This is fairly close to what was expected compared to what we’ve seen in the last three months or so. We’re settling down after the easy increases in June as things reopened.”

“The one thing that caught my eye was the heavy skew to part-time jobs, very few increases in full-time, so it’s maybe not quite as impressive as the headline would suggest. Still, broadly in line if not a little bit better than generally expected.”

“Canada and the U.S. are very much the outliers internationally. We are two of the few economies that have seen such a serious deterioration in our unemployment rate through this episode, so it’s good to see those rates starting to come back down again.” (Reporting by Jeff Lewis and Fergal Smith Editing by Denny Thomas)

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