Insights and Market Perspectives

Unemployment rises in Canada and the U.S. despite payroll growth

Author: Portfolio Specialist Group

July 9, 2018

AGF Weekly Perspectives

A recap of last week’s top economic news and what’s to come

More jobs, higher unemployment

  • Canada’s economy added close to 32,000 net new jobs in June, but the unemployment rate rose to 6% because of a surge in Canadians joining the labour force.
  • Similarly, U.S. nonfarm payrolls rose by 213,000 in June, while the unemployment rate climbed for the first time in a year to 4% from an 18-month low of 3.8% in May.
  • Wage growth in the U.S. also slowed unexpectedly with average hourly earnings rising just 0.2%.

More tariffs go into effect

  • The United States imposed tariffs on US$34 billion worth of Chinese products on Friday. China responded by putting its own similarly-sized tariffs on American goods.
  • U.S. President Donald Trump said this first wave of tariffs would be followed up by levies on another US$16 billion of Chinese products and continued to threaten Beijing with escalating tariffs on as much as US$450 billion worth of Chinese goods.
  • The U.S. Federal Reserve said “uncertainty and risks associated with trade policy had intensified” and “risks eventually could have negative effects,” according to minutes of the central bank’s last policy meeting on June 12-13 released on Thursday.

Manufacturing PMIs continue to signal healthy economy

  • Canada Manufacturing PMI went up to 57.1 in June 2018 from 56.2 in the previous month, beating market expectations of 55.4. The reading pointed to the fastest growth in factory activity since data began in October 2010, amid solid rises in new orders, output and employment.
  • Elsewhere, manufacturing PMI data fell in the U.S. last month to 55.4 from 56.4 in May, and also dropped in the eurozone to 54.9 from 55.5.

Other economic news

  • Canada’s goods trade deficit widened to a larger-than-expected $2.8 billion in May from a slightly revised $1.90 billion in April (previously $1.86 billion). This report is the last before the implementation of the steel and aluminum tariffs by the U.S. on June 1st.

What’s to come

Bank of Canada rate decision

  • The Bank of Canada will announce its latest decision on setting its key policy interest rate on Wednesday. Expectations are that the central bank will hike rates for the fourth time in a year.

Download the Summary

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit

© 2018 AGF Management Limited. All rights reserved.

More articles like this.

Inversion perversion: Why the yield curve may not be a surefire signal of the next recession

This time around, the yield curve may not be in such a rush to flip upside down and, because of that, it’s not necessarily the same surefire sign of what’s to come.

Read More

Gains may be tougher as the bull runs into the late cycle

The recent selloff in equity markets may not signal an immediate end to the bull run, in fact markets have largely seen positive returns this week, but further gains are only going to get harder to come by at this late stage in the cycle.

Read More

Stormy weather: Markets are roiled by the hurricane and the thunder created by the Fed

AGF’s Steve Bonnyman gives his perspective on recent market volatility, driven by trade disputes, a president fighting with the Fed, and how investors should position themselves going forward.

Read More