Key facts
- The U.S. economy shed 23,000 nonfarm jobs in July.
- U.S. job gains for May and June were revised down by a combined 103,000.
- The U.S. unemployment rate was reported as both 4.1% and 4.3%.
- Average hourly earnings in the U.S. rose 3.2% year-over-year.
- The U.S. dollar experienced its sharpest intraday fall in over a year.
- The Japanese yen surged against the U.S. dollar.
- Canada added 75,100 jobs in July.
- Canada's unemployment rate fell to 6.4%, a two-year low.
- Canada's Ivey PMI fell to 55.1 in July, a four-month low.
- Canadian employment declined in July according to the Ivey PMI.
The U.S. labor market unexpectedly lost momentum in July, shedding 23,000 nonfarm jobs, a significant miss from economists' forecasts of an 80,000 gain. Revisions to May and June payroll figures were also substantial, lowering job creation by a combined 103,000. Reports on the unemployment rate were conflicting, with some sources indicating it eased to 4.1% due to a labor force participation rate hitting a 5-1/2-year low, while another reported it rose to 4.3%. Average hourly earnings rose 3.2% year-over-year.
The surprisingly weak U.S. employment report has had a significant impact on financial markets. The U.S. dollar experienced its sharpest intraday fall in over a year, and the Japanese yen surged against the dollar. Traders are now alert to the prospect of currency intervention, following recent coordinated action by Japan and the U.S. The data has intensified speculation that the Federal Reserve may pivot towards cutting interest rates, despite earlier hawkish guidance, leading markets to reduce expectations for a September Fed rate hike.
In contrast to the U.S. figures, Canada's economy demonstrated resilience in July. Employment rose by 75,100 positions, significantly exceeding expectations. The unemployment rate decreased to 6.4%, reaching its lowest point in two years. However, Canadian economic activity expanded at a slower pace, as indicated by the Ivey Purchasing Managers Index falling to a four-month low of 55.1 in July from 56.2 in June. Within Canada's PMI report, employment declined while price increases accelerated.