The Canadian economy churned out a modest 6,600 new jobs in July, raising new questions about whether the country is teetering on the brink of a recession.
Figures released by Statistics Canada on Friday showed that the unemployment rate remained at 6.8 per cent and that most of the new jobs created in July were in part-time work and among the self-employed. The economy has shrunk in each of the past five months, an indication the country may have been in a recession. Friday's job report did little to clarify matters.
"On balance, most sectors have been contracting rather than expanding in terms of employment, although we've seen net positive gains in employment," said Randall Bartlett, senior economist at Toronto-Dominion Bank. "Thirteen of 20 major sectors actually contracted [in the latest gross domestic product report], so to me that doesn't necessarily point to health in the economy or the concentration of weakness to one specific sector."
He added that many of the jobs created since the beginning of the year have been concentrated in the hot housing markets, especially after two rate cuts by the Bank of Canada. Canada's strong recent export numbers, which climbed 6.3 per cent in June, have also helped slim the trade deficit and further blurred where the country stands on a recession, according to Mr. Bartlett.
Krishen Rangasamy, senior economist at National Bank of Canada, said an average of 15,000 jobs have been created each month for the first seven months of the year, indicating there was no recession, "but it's too early to tell."
The broader picture suggested the number of full-time jobs has been increasing in the past 12 months. The country gained 255,000 full-time jobs in total since July, 2014. By contrast, Canada lost 94,000 part-time jobs over the same period. Total employment grew by 161,000 or 0.9 per cent during that time.
However, on a monthly basis, part-time employment increased by 23,900 last month from June. That was offset by a loss of 17,300 full-time jobs over the same period. That suggested no real net change, according to Statistics Canada analyst Andrew Fields.
Only two of the 10 provinces saw gains last month. Quebec came out on top, adding 21,700 jobs, while Nova Scotia was second best as it added 3,100 jobs, mostly full-time. Oil patch woes in Western Canada had an impact with marginal losses experienced in Saskatchewan, down 7,400 jobs, and Alberta, off 4,300. Manitoba also lost 3,800.
While job losses in Alberta came in low, the unemployment rate has increased 1.5 percentage points this year to 6 per cent. Since September, which was the peak of employment in natural resources in Alberta, there have been 28,000 fewer people working in the province, a 15-per-cent drop, according to Mr. Fields.
Other sectors that saw surprising job losses last month were accommodation and food services, despite expectations that the Pan American Games would help drive positive numbers there. However, Mr. Bartlett of TD questioned whether that was factored into the report. He also said it was surprising to see wage growth of 3.3 per cent this month despite the month's gains being led by part-time jobs.
Douglas Porter, chief economist at Bank of Montreal, said that while it's unlikely the Bank of Canada will lower rates, he "wouldn't rule it out, especially with oil prices remaining in full-scale retreat here."
The U.S. dollar rose on the announcement Friday that the U.S. created 215,000 new jobs. The news adds ammunition to the already increasing chance that the Federal Reserve may raise interest rates come September, and may further drag down the loonie.
"The good news is the U.S. economy is still recovering nicely, which will translate into more spending in the months ahead," Mr. Porter said.
"The bad news is it probably does increase the likelihood of the Fed beginning to raise interest rates and that will keep the U.S. dollar on offence and the Canadian dollar on defence. Unless there's a miraculous rebound in oil prices in the next few months, I think the Canadian dollar is likely to weaken further over the late summer and early fall."