Canada's economy added 231,000 jobs in June as some businesses reopened after being locked down due to the COVID-19 pandemic.
It was the biggest monthly gain since March and easily beat estimates for a gain of 175,000 jobs. The unemployment rate fell to 7.8 per cent, according to Statistics Canada.
Not surprisingly, the gains were driven entirely by part-time work and among youth. The job market was little changed when it came to full-time work and hours worked.
A big chunk of the job gains came from accommodations and food services, which added 101,000 jobs. Non-essential store re-openings led to 75,000 jobs in retail trade.
The number of Canadians working from home fell by 400,000 to 4.7 million.
The June gain follows a loss of 68,000 jobs in May and 275,000 over the past two months.
After falling the previous two months, the labour force participation rate ticked up 0.6 percentage points to 65.2 per cent.
Labour shortages and the loonie
“While the rising participation rate should alleviate some concerns about widespread labour shortages, there are likely still pockets of the economy where labour is scarce and it could become more of an issue as hiring continues in the months to come,” said CIBC senior economist Royce Mendes.
“The Canadian dollar is trading stronger in the wake of the upside surprise.”
But the loonie’s trajectory could change based on the price of oil.
“The OPEC+ meeting did not go as planned, as an intense clash between Saudi Arabia and the United Arab Emirates led to a collapse in talks. A coordinated August output hike will likely no longer take place, but individual nations are expected to unilaterally increase supply,” said Cambridge Global Payments currency strategist Hector Demarco.
“Earlier in the week, front-month West Texas Intermediate prices touched $77 a barrel, and have fallen back under the $74 mark."
The Bank of Canada on track
Along with a string of interest rate cuts, the Bank of Canada launched a massive stimulus program called Quantative Easing (QE) to help cushion the economy from the economic effects of the pandemic. It has already started tapering its QE program and appears on track to continue.
"We'll see how much momentum there is once we get to the fall." said BMO director of Canadian rates & macro strategist Benjamin Reitzes
"For now, this is just the latest piece of evidence that the Canadian economy is rebounding from the third wave, leaving few, if any, obstacles to another taper from the Bank of Canada at next week's policy meeting."
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.