Canada Unemployment Rate Hits Two-Year Low Amid Strong Job Gains

Canada's unemployment rate dropped to 6.4% in July, hitting a two-year low as the economy added 75,000 jobs across various industries. According to Statistics Canada, this marks a significant improvement over expectations.

TD Economics' Andrew Hencic noted that the labour market is showing 'clear signs of recovery', but also warned about ongoing softness in wage growth and core inflation. He expects the Bank of Canada to hold its benchmark interest rate at 2.25% for the rest of the year.

Capital Economics' Ariane Curtis echoed similar sentiments, stating that July's job gains were 'much stronger' than anticipated. She also highlighted the decline in public sector employment and the increase in full-time and part-time jobs driven by the private sector.

KPMG Canada's Ali Jaffery noted that businesses are starting to hire again after holding back due to trade concerns, but emphasized that job gains are not being driven by new entrants. Instead, they reflect unemployed workers finding employment.