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Economic News

Canada: Modest Job Losses Help Make the Case for Another Rate Cut

July 5, 2024
Marc Desormeaux
Principal Economist


  • Net total Canadian employment fell by 1.4k in June 2024. The unemployment rate rose to 6.4%—the highest since January 2022 and 1.6 percentage points above its June 2022 low. Table 1 summarizes key data points.
  • We’re tracking Q2 2024 real annualized Canadian GDP growth of roughly 1.5%, in line with the last Bank of Canada (BoC) projection.


The June 2024 numbers were mostly negative. Job losses, while small, were concentrated in full-time positions, while hours worked weakened. Alongside those data points, job creation remains much softer than the rate suggested by decades-high population growth (graph 1), and the employment rate was at its lowest level in more than two years. 

Quebec drove most of the job losses recorded in June, but we’re still seeing labour markets weaken across most of the country. The last Desjardins Provincial Outlook External link. argued that the most interest rate-sensitive provincial economies will feel the coming economic slowdown most, and that remains our view. However, employment growth is lagging headcount gains in all four of the largest provinces (graph 2), and gaps in Quebec and Alberta have recently been catching up to those in housing-oriented Ontario and BC.

Population gains were yet again exceptionally strong across the country, but we still suspect that effect will fade as the year progresses. That’s largely because of Ottawa’s plan to lower the temporary resident population External link.—the principal driver of recent demographic gains External link.—by around 20% by the end of 2026. Once that policy begins to take hold, we should see an easing of the population-induced tailwind for economic activity. That could further cool inflation as well as ease rental market tightness in an environment of limited housing supply. But temporary labour has also helped fill job vacancies External link. and kept a lid on wage pressures.

Another acceleration in permanent employees’ wage growth (graph 3) isn’t ideal from an inflation control perspective, but we highlight again that there are additional points to consider. Although this indicator is an important element of the BoC’s tracking of potential wage-push inflation, the Bank looks to a broad group of compensation measures when making decisions on the direction of monetary policy. Many of those are still showing a more moderate rate of growth. Public sector compensation is also making a larger contribution to headline wage gains than in the past External link., which we expect the Bank of Canada to look through. 

Ultimately, this morning’s data don’t change our view that the BoC will reduce its policy rate later this month. Although inflation picked up in May and some wage-related risks remain, it’s obvious that the labour market is softening across the country. That should support efforts to contain price pressures in the months ahead.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.