Canada sheds 6,400 jobs in June

The Canadian economy lost 6,400 jobs in June, adding fuel to the recessionary fire for economists who think Canada's economy is headed into a rough patch.

Jobless rate holds steady at 6.8% as results beat economists' expectations

Canada's unemployment rate has held steady at 6.8 per cent for five straight months now, but the economy lost 6,400 jobs in June. (Norm Betts/Bloomberg News)

The Canadian economy lost 6,400 jobs in June as gains in full-time work were offset by losses of part-time jobs, Statistics Canada says.

The jobless rate stayed steady at 6.8 per cent, the same level it has been at since February. the data agency reported Friday.

It was a better showing than what a consensus of economists were expecting, which was a loss of about 10,000 positions.

The number of full-time jobs increased by 64,800. However, 71,200 part-time jobs were lost in the month.

"This number leaves the Canadian average monthly job gain for the year at a still solid 16,000 per month, and improves the composition of that employment in favour of full-time jobs," Scotiabank said after the numbers came out.

Provincially, employment fell in Quebec and New Brunswick, but increased in British Columbia, and Newfoundland and Labrador.

In Alberta, the job market was basically unchanged for the month. Over a longer time frame, however, the number of Albertans with jobs is now one per cent higher than it was this time last year, when oil prices were twice as high as they now are.

The 'R' word looms

Friday's jobs number is the last major economic data point that will be released before Wednesday, when the Bank of Canada will unveil its latest decision on interest rates.

In January, the bank shocked markets with a slight cut of its benchmark interest rate to 0.75 per cent. At the time, the bank said it made the move as a precaution, to buoy a Canadian economy hard hit by cheap oil prices.

Since then, official data has shown Canada's economy has contracted every single month this year. Many economists define an official recession as two consecutive quarters of declining growth, and by that yardstick, Canada's economy is officially two-thirds of the way towards recession — which means another cut could be in the offing.

About half of economists expect the bank to stand pat next week. The remainder expects a cut, according to data compiled by Bloomberg.

But at least one poured cold water on the recession theory on Friday, despite the jobs data.

"It's hard to argue that the economy is in a dire state on the basis of labour data," Scotiabank said, noting  the economy has cranked out 102,000 new jobs in 2015.

"The country is not in recession in any meaningful or broadly defined way at this point, and we believe that the Bank of Canada should not and will not cut next week."

BMO's Doug Porter agreed with the general assessment that Friday's jobs numbers aren't that bad, and certainly no reason to panic.

"Today's report does little to advance the cause for rate cuts," Porter said. "While no one is going to cheer a headline decline in jobs, the drop comes as zero surprise after the hearty gain in the prior month."