Canada's July jobs data highlights headwinds to an already struggling economy

Statistics Canada report released on Friday last week showed that Canada lost a surprising 31,200 jobs in July. The national unemployment rate inched up to 6.9 percent in July from 6.8 percent in June. Canada's unemployment rate has been stuck at 7 percent since last autumn and is refusing to ease further, despite a falling participation rate.

July witnessed the biggest one-month drop in full-time work in nearly five years. More than 70,000 full-time jobs were lost in July, in particular in the service sector. The creation of only about 40,000 new part-time positions cannot counterbalance that. Meanwhile, the participation rate fell to its lowest level since late 1999, as more people either stopped actively searching for work or stopped working altogether.

The public sector shed 42,000 positions, with about half the losses due to a drop in public administration employment at the municipal and regional level. On the positive side, the private sector added 13,600 positions.

“Another hit to an already struggling Canadian economy,” said Arlene Kish, senior economist with IHS Global Insight. “Canadians are wondering where the jobs are. Discouraged workers are leaving the labour force.”