Statistics Canada reported that Canada’s economy added just 18,200 jobs in June. While June’s gains were a slowdown compared to the 87,800 job additions in May, it was the second consecutive increase and topped economists’ expectations.

The part-time sector added the most jobs over the month, particularly among young workers in retail and food services industries. Manufacturing kept losing ground, shedding 17,000 jobs in June as U.S. tariffs continue to weigh on the sector.

The unemployment rate ticked lower to 6.5%.

Looking at trade, Canada’s trade surplus widened to $4.2 billion in May, which was the largest surplus in four years. Canada’s exports rose by 0.9% to a record high of $77.1 billion, benefiting from higher shipments of aluminum and alloys, primarily to Europe.

Despite the slowdown, another month of job gains suggests Canada’s labour market may be stabilizing. Rising foreign demand for Canadian goods may help lift Canada’s job market, particularly in the manufacturing sector, which has struggled under the weight of trade disruptions with the U.S.

The U.S. trade deficit widened to US$77.6 billion in May from US$54.6 billion in April, which was the largest trade deficit since March 2025.

Imports rose to US$395.3 billion, driven by higher purchases of pharmaceuticals, cellular phones and passenger cars.

Rising crude oil imports, tied to ongoing tensions in the Middle East, were a key factor pushing the trade deficit higher.

Exports fell by 3.2% in May, weighed down by weaker shipments of gold, computers and pharmaceutical products.

A wider trade deficit can weigh on economic growth since it subtracts directly from gross domestic product. This has been a key concern of the U.S. Presidential Administration as it imposed tariffs. Rising oil imports add another layer of inflation risk for policymakers to watch alongside interest rates and consumer prices.

China’s annual inflation rate softened to 1.0% in June from 1.2% in May, which was below economists’ expectations.

The annual core inflation rate, which excludes more volatile food and energy prices, was also 1.0%, suggesting demand-driven price pressures remain modest.

The slowdown was helped by falling fuel costs after China’s government reduced gasoline and diesel prices in June, following easing tensions in the Middle East.

Producer prices moved the other way, rising by 4.1% year over year in June, which marked the fastest annual increase since July 2022. The increase came amid higher costs for industrial materials.

Together, this points to a mixed economic landscape. On the one hand, soft consumer demand keeps retail prices in check, while on the other, rising factory costs could squeeze profit margins and eventually filter through to consumers.

Retail sales in Europe rose by 0.2% in May, rebounding from the 0.3% decline in the previous month. On a year-over-year basis, retail sales climbed by 1.6%.

May’s increase in spending was led by food, drinks and tobacco, which were up by 0.6%. This was partially offset by a 0.5% decline in sales of automotive fuel.

Spending in Europe rose despite higher prices, weaker consumer confidence and falling real incomes earlier this year.

Separately, producer prices in Europe increased by 0.2% in May over the previous month, largely in response to higher costs for intermediate goods, such as raw materials.

Resilient consumer spending is a positive sign for economic activity, but rising producer prices could eventually filter through to higher prices of store-shelf items. The impact of the European Central Bank lifting interest rates in June has yet to filter through the economy, and it could eventually weigh on spending.