Canada's weaker than expected jobs data in July is a sign that the country’s economy is beginning to cool, one economist said. 
 
Last month, Canada unexpectedly shed 6,400 jobs while the unemployment rate rose to 5.5 per cent, according to Statistics Canada data released on Friday. The figures are a confirmation that the Bank of Canada’s aggressive interest rate hikes have begun to work their way throughout the economy, Dawn Desjardins, chief economist at Deloitte Canada, told BNN Bloomberg. 
 
“The long awaited slowing in terms of Canada’s labour market is materializing,” she said.
 
Desjardins explained that the same softness that has shown up in the labour market is also being reflected in consumer spending — however this slowdown is a manufactured one. 
 
“I would say overall it’s not like we're in a sharply deteriorating labour market, we still, I would argue, are in a pretty tight labour market condition— easing a little bit which is you know by design,” she added. 
 
Deloitte is calling for extended weakness in the Canadian economy to reveal itself in the second half of 2023, Desjardins said. 
 
As for the Bank of Canada’s future plans, Desjardins believes the bank will likely choose to hit pause on interest rates at its September meeting in light of the recent data. 
 
“I do think that this really bolsters the case for the bank to remain on the sidelines,” she said. 

Another economist agrees with that sentiment. 
 
“I think they (the Bank of Canada) have sufficient reason to not hike and stay on the sidelines because that unemployment rate has risen about 50 basis-points in a fairly short period,” Beata Caranci, chief economist at TD Bank, told BNN Bloomberg in a TV interview on Friday. 
 
While Caranci pointed to the general volatility of monthly jobs data, she did note that the rise in wage growth will be a particularly worrying figure for the central bank. 
 
“Wages rising at five per cent — they will not like that. That is not consistent with inflation being sustained at two per cent,” she added. 
 
Wage growth, though a lagging economic indicator, usually needs to hover around the three per cent mark for inflation to cool, she added. 
 
As for the heightened unemployment rate of 5.5. per cent, Caranci attributed this to an imbalance between supply and demand for labour. 
 
“The labour force is rising at a faster rate then Canadian companies can pump out on the jobs side,” Caranci said.