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Economists had expected a weak employment report for June on the heels of the larger-than-expected gain in May. Canadian employment fell by 6,400 last month as the biggest decline in part-time work in more than four years dwarfed gains in full-time positions.

The unemployment rate remained at 6.8 percent for the fifth month in a row. If you convert the Canadian jobless number to its U.S. equivalent, the rate would be 5.8 percent compared to 5.3 percent Stateside–the lowest level in the U.S.since April 2008.

This report follows on the heels of a consistent stream of weak Canadian data leading some to suggest a recession is in train. I’m not willing to make that call yet, but clearly the economy did not pick up in the second quarter contrary to what the Bank of Canada had expected.

Canada is underperforming the U.S. by a wide margin, battered by the rout in oil prices. Over the past year, the jobless rate has fallen by 0.8 percentage points in the U.S. compared to only a 0.2 percent drop in Canada. The labour force participation rate in Canada, however, exceeds the rate in the U.S. The American employment rate has fallen to it lowest level since October 1977 owing to a disturbing rise in discouraged workers who have given up looking for a job.

The Bank of Canada meets next week and is faced with a troubling reality–output has fallen for four consecutive months, business confidence and capital spending plans are down and the trade deficit is at its second-largest level on record. Contrary to the Bank’s expectation, non-oil exports have not offset the decline in oil exports despite the sharp decline in the Canadian dollar. That may well lead Stephen Poloz to cut Canadian overnight rates on July 15 for the second time this year.

He, however, is between the proverbial rock and a hard place. If he does cut rates, he will be harshly criticized for contributing to a further rise in household debt and to feeding a housing bubble in Vancouver and Toronto. If he doesn’t cut rates, he will take heat for his Pollyanna-like assertion that the economy is going to bounce back any time now.

Either way, monetary stimulus at this stage will not boost the sectors or regions in need of help. Unfortunately, monetary policy is the only game in town, however, as fiscal stimulus is off the table both for economic and political reasons. The Harper government is committed to balancing the budget, even in the face of a weakening economy, and the summer recess and October election preclude any fiscal changes probably until next year at the earliest. Nevertheless, public sector employment has risen by just over 2 percent in the past year compared to a 1 percent gain in the private sector.

We can take some solace in June’s decline in part-time and self-employment–an indication that some of these workers may be shifting to full-time jobs.

Regionally, Quebec was the biggest loser with a job loss of 33,300. Employment rose 15,000 in British Columbia and was little changed in Ontario. Alberta also saw little change in employment last month, having suffered a nearly full percentage point rise in its unemployment rate in the past year.