Canada’s Jobless Rate Hits 8-Year High of 11.6% in June

Canada’s unemployment rate hit an eight-year peak in June, the highest among major industrialized nations, depressing hopes of any quick relief from Canada’s two-year recession.

Statistics Canada, a government agency, reported Friday that Canada’s jobless rate jumped to 11.6% in June from 11.2% in May.

Economists had expected the rate to drop to 11.1%.

“Underlying this is still general weakness in Canada’s economy and signs that it’s going to be difficult to sustain the recovery that we saw in the first quarter,” said Andrew Pyle, economist at MMS International.

Economists say the June jobless data will prod the central Bank of Canada to lower interest rates further this summer. Many analysts say major Canadian banks may slash the prime rate next week in response to the bleak jobs outlook.

The prime rate, which banks charge their most credit-worthy customers, is now at a 19-year low of 7%.

“For the Bank of Canada, the employment report is consistent with a slow recovery and will likely keep them on their current track of modest easing,” said Paul Ferley, assistant chief economist at the Bank of Montreal.

Most of the jobless rise was due to youths between the ages of 15 to 24 entering the job market and not finding work, economists said.

“It might tend to dent consumer confidence,” said Doug Porter, economist at Bank of Nova Scotia. Consumer confidence is now at historic lows in Canada.

Porter added that he could not rule out a 12% jobless rate before the end of the year.