Canada’s economy added 83,000 jobs in June, the most since December, and the jobless rate unexpectedly ticked down to 6.9%, a surprisingly strong showing for an economy that’s still on the ropes from trade war.

Economists had predicted the unemployment rate would rise, with little to no change in net jobs. The positive report gives the Bank of Canada more leeway to hold rates steady later this month.

“While downside economic growth risks remain, the June labour market data is consistent with our base-case assumption that the Bank of Canada will not cut interest rates further after skipping reductions at each of the central bank’s last two policy decisions,” RBC assistant chief economist Nathan Janzen wrote in a note to clients.

Janzen listed a number of positive aspects of the latest jobs report:

Layoffs remained relatively low
Manufacturing employment edged up, snapping a streak of four monthly declines
The services side of the economy remains “relatively resilient”
While most of the jobs increase was in part-time, full-time employment also rose
Hours worked climbed 0.5%

The jobless rate fell 0.1 percentage in June, the first decrease since January, Statistics Canada reported Friday. Employment in wholesale and retail trade increased by 34,000 in June, the second consecutive monthly gain, with the increase concentrated in retail trade.

BoC seen standing pat

Swap markets are currently pricing in a 60% chance the Bank of Canada will hold rates steady for a third consecutive time at its July 30 meeting. Many economists believe rate cuts are coming, but not until later this year.

Despite the positives, slack is building in Canada’s labour market, which is “substantially weaker” than it was last year, Janzen said, with “weakness concentrated in sectors and parts of the country more sensitive to international trade disruptions. And trade risks remain with Canada added to a growing list of countries facing threatened new tariff hikes from the U.S. administration on August 1st.”

Royce Mendes, Managing Director & Head of Macro Strategy at Desjardins Capital Markets, says with the unemployment rate still elevated compared with last year, the jobs data “won’t be the swing factor” in the Bank of Canada’s next decision. Rather, the inflation data coming next week will likely “play a much more important role in determining whether central bankers resume monetary easing later this month.”