OTTAWA, (Reuters) – Canada’s job growth slowed in June for a second straight month in a reality check after outsized employment gains earlier this year, firming the market’s view that the central bank won’t act soon on recent hints of a rate hike.
Waning business confidence due to the European debt crisis and a stalled U.S. economy meant Canada generated just 7,300 net new jobs last month, adding to 7,700 in May, according to Statistics Canada data released on Friday.
But May data on building permits pointed to a still-hot housing market, a top concern for the Bank of Canada, even as the pace of purchasing activity fell in June to its lowest level in almost a year.
The June employment increase, though above market forecasts of a 5,000 gain, is within the margin of error for Statscan’s household survey.
Analysts took some comfort from the gains after anticipating some payback for the unsustainable two-month jump of 140,500 jobs in March and April – the biggest in over 30 years.
“This is consistent with fairly decent progress in the Canadian labor market,” said David Tulk, chief Canada macro strategist at TD Securities.
“I think this does speak to some residual momentum in the Canadian economy but perhaps a little bit more caution on the part of firms looking at some of the international headwinds and maybe a sense of domestic fatigue.”
The unemployment rate dipped to 7.2 percent in June from 7.3 percent as fewer people were looking for work, Statscan said.
Canada’s economy and job market bounced back from the 2008-09 recession faster than that of the United States and is set to grow by just over 2 percent this year, thanks largely to perky household spending.
