CIBC economists dug through today’s Canadian employment report and see a jobs market that continuing to gradually weaken. The country added 8.8K compares compared to a -12.5K consensus but unemployment ticked up to 7.0% from 6.9%.
“Trade sensitive areas such as
manufacturing and transportation & warehousing unsurprisingly showed weakness, but for now that is being offset by
job growth in other areas,” CIBC writes.
If that continues — which they expect — they envision a BOC rate cut in July.
“Today’s data suggest that while the economy isn’t yet contracting, it also isn’t living up to its
long-run potential resulting in a continued drift higher in the unemployment rate. We expect that the gradual rise in
joblessness will continue into the second half of the year, with positive developments regarding US tariffs and some
further interest rate cuts from the Bank of Canada required to help stabilise conditions before year-end and bring a
reduction in the unemployment rate again in 2026,” CIBC writes.
Notably, Lululemon today was surprisingly upbeat on the Canadian consumer.
Meanwhile, Toronto’s unemployment rate hit 9% in May, which is the highest since 2012 (ex-covid).
h/t @BenRabidoux
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