Viewpoint: Employment – A Mixed Bag Stateside Favours the Doves; Canada’s Random Number Generator Spits Out a Big One

Employment: A Mixed Bag Stateside Favours the Doves; Canada’s Random Number Generator Spits Out a Big One

Overall U.S. nonfarm payroll¹ employment came in well below expectations, with the release on August 7, 2026, showing that the American economy shed 23,000 jobs on net in July compared to consensus expectations for a gain of 80,000 — the softness here was compounded by the cumulative 103,000 downward revision for the previous two months’ worth of data. That disappointment, and suggestion that the U.S. job market may not be on as sound a footing as previous reports suggested, has markets paring expectations for imminent rate hikes stateside, which is bringing yields lower across the curve in a bull-steepening fashion and giving support for equities ahead of the North American open.

Now into the data. That headline reading generally overstates the weakness in the report — which is not great by any means but also isn’t flashing anything nefarious like “recession” (especially when taken with other recent job market indicators).

The overall decline was the result of a 53,000 decline in public sector employment, with local governments accounting for 50,000 of that. The private sector, in contrast, added 30,000 jobs on net in the month — a soft read compared to the expected +82,000 in the month, but far from a disaster and reinforcing the “low fire, low hire” environment that other data has corroborated. Further, gains were pretty broad across sectors with increases registered everything aside from natural resource production (-2,000), finance (-14,000) and somewhat weirdly in retail (-19,000) and leisure & hospitality (-40,000), with these latter two largely contradicting the more positive reports on the economic impact of the World Cup (the World Cup ran until July 19; the employment data was collected the week containing the 12th). The one-month payroll diffusion index (a gauge of the breadth of firms adding to headcounts) remained above 50% (51.8% in July, down from 53.2% in June and 54.2% in May), which continues to point to broadly positive demand for workers.

Private sector nonfarm employment by industry, U.S.
(month-over-month change in thousands)

Source: Guardian Capital LP, based on data from U.S. Bureau of Labor Statistics to July 2026

Also worth noting is that average hours worked per week held steady at 34.3 and aggregate hours worked — the true gauge of the labour input to the economy — held steady despite the overall employment decline.

Elsewhere in the report, the unemployment rate ticked down in the month (a 13-month low of 4.1%) while the broader “underemployment” measure held at its five-month low of 7.9%. On the surface, this is constructive (and better than expected); however, it was predominantly due to the unexpected decline in labour force participation (down to its lowest level since 2021 at 61.4%), which is less positive.

Unemployment rates, U.S.
(percent)

Shaded regions represent periods of US recession; source: Guardian Capital LP, based on data from U.S. Bureau of Labor Statistics to July 2026

On the inflation front, the average hourly wage rate dipped to a five-year low of 3.2% from 3.4% in June — this continuing disinflation in the cost of labour is clear fodder for the doves at the U.S. Federal Reserve (Fed).

Average hourly wage rate, U.S.
(percent)

Shaded regions represent periods of US recession; source: Guardian Capital LP, based on data from US Bureau of Labor Statistics to July 2026

So, overall, not a great report on the health of the U.S. job market, but also not as bad as the headline suggests — a mixed bag that likely supports punting any decision to make a change in monetary policy.

CANADA

Turning to Canada, the random number generator that is the Labour Force Survey² spit out a big number in July, with the report indicating the Canadian economy added 75,100 jobs (consensus was +20,000). These gains (which were split between full- and part-time gigs and fairly broad across the economy, but exclusively within the private sector) drove a drop in the unemployment rate even with the rise in labour force participation — though the growth in the average wage rate for permanent employees moderated pretty sharply.

Taken as a whole this report offers a positive sign that economic momentum is recovering in Canada after a fairly sluggish start to the year, but as is always the case, the volatility in these data mean it is worth taking them with a grain of salt — and the still elevated unemployment rate points is consistent with the Bank of Canada’s assessment that the domestic economy is operating with excessive slack, that should continue to deter the policymakers from acting to address concerns around inflationary pressures.

S&P 500 Index Performance Since June 2, 2026
(percent; U.S. dollar basis)

*Magnificent 7 = Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla; source: Guardian Capital LP, based on the author’s calculations using data from Bloomberg from June 2 to July 16, 2026

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David Onyett-Jeffries
David Onyett-Jeffries is Vice President, Economics & Multi Asset Solutions, at Guardian Capital LP (GCLP). He provides macroeconomic guidance to GCLP and its affiliates. Additionally, he is a portfolio manager of GCLP’s multi-asset portfolios and funds and works closely with GCLP’s Directed Outcomes team.

¹ U.S. Bureau of Labor Statistics, Economic News Release, Employment Situation Summary, August 7, 2026, https://www.bls.gov/news.release/empsit.nr0.htm
² Statistics Canada, The Daily, Labour Force Survey, July 2026, August 7, 2026, https://www150.statcan.gc.ca/n1/daily-quotidien/260807/dq260807a-eng.htm

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Published: August 10, 2026