Canada Economics: Few signs of sustained strength in June employment data

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Canada Economics: Few signs of sustained strength in June employment data

Canada Economics

10 July 2026 Citi Research

Data – Employment rose by 18.2k job in June, stronger than consensus

expectations for a 10k increase and our forecast for flat on the month. Full time

employment was essentially unchanged, up 0.6k while part time employment rose

by 17.5k.

The unemployment rate fell to 6.5% from 6.6% in May, with the labor force

participation rate unchanged at 65.0%. Average hourly wages of permanent

employees rose to 3.7%YoY. Actual hours worked remain modest, rising 0.2%MoM

and moderating to 0.2%YoY from 0.3% in May.

Citi’s view – Following a very strong increase in employment in May that retraced

declines earlier in the year, a modest increase in employment in June reaffirms that

monthly employment data have become very volatile over the last year and a half.

Rather than a sustained increase in new hiring, employment patterns seem to be

experiencing large swings from month-to-month, but with overall employment

levels generally moving sideways.

Soft employment growth on average has been enough to keep the unemployment

rate stable in a 6.5-7% range for about two years (the unemployment rate was last

below 6.5% in July 2024). This stability has occurred despite a substantial slowing

in labor supply with new immigration trends. We also continue to see upside risks

to labor force participation and the unemployment rate as monthly population

estimates seem to have bottomed and may be picking up again.

But importantly, a 6.5-7% range for the unemployment rate, while indicating that

demand is not necessarily weakening further, is consistent with a persistently

negative output gap. Hours worked moving essentially sideways would corroborate