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Canada’s labour market weakened in July, raising expectations for its central bank to cut interest rates for the third time in a row at its September meeting.

The country’s labour force survey showed the economy shed 2,800 jobs last month, surprising economists who expected 22,500 additions, according to Reuters data. The unemployment rate held steady at 6.4 per cent, while the labour participation rate fell to its lowest since 1998, excluding 2020 and 2021, years severely affected by the Covid-19 pandemic.

July’s report showed the second consecutive labour market decline after the country shed 1,400 jobs in June, also below expectations for an increase of about 25,000.

The weak figures increased the already high probability of the Bank of Canada cutting interest rates in September. Traders on Friday morning gave odds of over 80 per cent for a 0.25 percentage point cut at each of the BoC’s three remaining meetings in 2024.