The latest Statistics Canada economic update paints a bleak picture when it comes to unemployment.

Canada shed 6,400 jobs in July and it could have ramifications on upcoming interest rate adjustments by the Bank of Canada (BoC).

Unemployment grew by 0.1% last month to 5.5% indicating a three-month consecutive spike in job losses. 

“The soft July employment report is just the latest arrow in the quiver of signs that the economy is losing momentum,” said BMO managing director of economics Doug Porter. 

Some of the groups hardest hit by unemployment were men aged 25 to 54 (0.4%) and men aged 15 to 24 (0.9%). 

Unemployment was led by the construction industry with a whopping 45,000 jobs lost in July. Construction was followed by losses in public administration and information, culture and recreation.

“Looking beyond the next rate decision, we suspect that the bank may be done raising rates, although still-firm wage and core price growth means that rates are likely to stay high for long,” said Porter. 

Recently, former BoC governor David Dodge warned that Canadians should expect higher interest rates well into 2025 should the country reach its inflation targets. 

“It’s going to be a long period of what would be considered elevated interest rates,” said Dodge. 

“What it will require (disinflation) is continued— rather elevated— interest rates right through 2024, right into 2025.”

In July, the BoC raised its key interest rate by 25 basis points to 5% – the highest it’s ever been since 2001. 

“The stubbornness of core inflation in Canada suggests that inflation may be more persistent than originally thought,” said the BOC’s report. 

“The next stage in the decline of inflation towards target is expected to take longer and is more uncertain. This is partly due to elevated services inflation, which can adjust sluggishly, and uncertainty about expected inflation.”