Rosenberg Research Says June's Labor Data to Keep Bank of Canada on Hold for "A While Longer"

09:58 AM EDT, 07/14/2025 (MT Newswires) -- Never underestimate the typically volatile Canadian household employment survey to provide a major surprise in both directions and this time around, a shocker to the upside resulted from Friday's Labour Force Survey (LFS), said Rosenberg Research.

The headline jobs number came in at an "eye-popping" 83,100, gain which is the strongest showing of the year and made a mockery of a consensus looking for a flat reading, noted Rosenberg Research. The highest estimate on the Street was for a 25,000 increase.

The unemployment rate managed to dip back to 6.9% from 7.0% instead of inching higher to 7.1% as Bay Street economists had projected. Nobody was calling for a sub-7.0% jobless rate. If the Bank of Canada is like the Federal Reserve, then all that matters is the headline jobs number and the unemployment rate -- which means the Bank of Canada will be sidelined for a while longer, stated Rosenberg.

Friday's LFS saved the Canadian dollar (CAD or loonie) from breaking through the 50-day moving average, which it seemed set to do following the latest tariff bombshell out of the White House.

Scratching the surface, Rosenberg detected a few blemishes. Fully 84% of the employment bulge was in part-time jobs. A big surprise came from the goods-producing sector, where employment rose by more than 10,000, but that recouped barely more than 10% of the steep decline during the February-May period. Despite the apparent tightening in the labor market, somehow wages cooled off to 0.2% month-over-month gains after seasonal adjustment and the year-over-year trend slowed to 3.2% from 3.5% in each of the prior two months, now the softest pace since February 2022.

When Rosenberg looks at Q2 as a whole, employment, like real gross domestic product, basically stagnated. Not a good look here for productivity but at least it can be said that flat is better than decay, which has been the state of affairs in Canada for many years.

However, overall, there is no need to nitpick this report -- it had much less hair on it than the comparable U.S. number, added Rosenberg. The workweek expanded by 0.5% month over month in June, for example, while it declined by 0.3% in the U.S.. The participation rate inched higher to a five-month high of 65.4% from 65.3% in each of the prior two months; so this wasn't the same as the U.S. report, where the only reason for the dip in the jobless rate was a decline in the labor force.

Even if part-timers dominated the report, the reality is that full-time employment did rise by 13,500 and is riding a three-month winning streak. The employment-to-population rate ticked higher to 60.9% in June from 60.8% in May. When you add it all up, there is no urgency here for the BoC to do anything at the next meeting or two, but blunting whatever "feel good" factor comes from this report is President Donald Trump turning up the heat on the tariff front, according to Rosenberg.

The tariffs won't just hit Canada directly, but indirectly through tariffs on other countries -- with important knock-on effects for an economy so heavily exposed to shifts in the world economic backdrop.

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