Statistics Canada will release the latest insight into the employment market Friday and analysts are not optimistic. At best they are calling for the numbers to be flat but there could be a decline in the number of new jobs and unemployment could edge higher. With sentiment in the labour market lower there are more analysts predicting that the Bank of Canada will need to make a second cut in interest rates this year. Some are even talking of a rate cut this month with the next decision due next week. As the world’s financial markets await the fall-out from Greece’s decision to reject a reform deal it could further intensify pressure on the BoC to make a pre-emptive strike to bolster weakness in the Canadian economy.

A Bank of America economic team says that Canada is now in a technical recession following two quarters of decline. The bank’s estimate is that the economy declined by 0.6 per cent in the second quarter of 2015; the same as in the first three months. It’s the first bank to call for a recession, defined by two consecutive quarters of negative growth. Analysts are now talking of an interest rate cut by the Bank of Canada this year with some even suggesting it will happen on July 15. 

The chief economist of Royal Bank of Canada’s asset management division says there is a 35 per cent chance that the BoC will make a further cut in interest rates in the coming months. Eric Lascelles says that with the weaker loonie still not boosting exports enough and the oil price staying low there may be further action required but that a lot depends on the capital expenditure of energy companies. He also sees a 25 per cent chance of a recession. The Bank of Canada will be announcing its next interest rate decision on July 15.