The Canadian economy suffered only mild job losses totalling 7,400 in the month of June — a number smaller than expected as a boost in self employment compensated for a drop in paid positions, Statistics Canada reported on Friday.

The unemployment rate edged up 0.2 percentage points to 8.6% in June, as more people looked for work.

Paid employment dropped by 44,600 jobs during the month, including 5,300 jobs in the public sector and 39,300 private sector jobs.

Self-employment rose by 37,000 in June. Since October, self-employment has grown by 1.5%.

Full-time employment continued its downward trend in June, offsetting gains in part time. Since employment peaked in October 2008, 454,000 full time jobs have been lost, compared with part-time gains of 84,000 jobs. Total employment has dropped by 370,000 since October.

Although June’s overall drop was milder than expected, economists said the weighting to self employed and part-time positions was not encouraging.

“Today’s job report is not as friendly as the headline would suggest,” said BMO Capital Markets deputy chief economist Douglas Porter. “Even if the Canadian job losses are gradually easing, it’s obvious that recession has yet to let go its steely grip on the economy, with the squeeze remaining particularly intense in manufacturing.”

CIBC World Markets Inc. economist Avery Shenfeld said the declines in full-time positions would have a negative impact on gross domestic product. “That’s not encouraging for output, as such jobs tend to entail fewer hours,” Shenfeld said. He expects a small drop in third quarter GDP.

Manufacturing was the sector hit hardest in June, shedding 26,000 jobs, most of which were concentrated in Quebec.

Experiencing gains for the month were the finance, insurance, real estate and leasing industries, which added 21,000 jobs, and information, culture and recreation, which gained 26,000 jobs.

Youths aged 18 to 24 were hit particularly hard in June, losing 33,000 jobs and driving the unemployment rate for this group up to 15.9% — its highest level in 11 years.

But this drop was offset by gains among workers 55 and older, for which 33,000 jobs were added. Older workers comprise the only age group that has added to their numbers since the start of the economic downturn, according to StatsCan.

Across the country, Newfoundland and Labrador was the only province with employment gains in June, up 2,500. But the province’s unemployment rate continued to edge up, reaching 15.6% as more people entered the labour force.

Other provinces with rising unemployment rates in June included British Columbia and Nova Scotia, each up 0.5 percentage points.

In Ontario, full-time losses of 56,000 jobs were offset by part-time gains of 57,000, leaving total employment unchanged. Ontario’s unemployment rate edged up to 9.6% — its highest rate in 15 years.

Employment in Saskatchewan was virtually unchanged in June, leaving it as the only province with an upward trend in employment since October, with an increase of 1%. It has the lowest unemployment rate across the country, at 4.6%.

Speaking on Thursday, Finance Minister Jim Flaherty said he expects the unemployment rate to continue to rise in the months to come.

According to Shenfeld, a boost in the unemployment rate above the 9% mark looks “inevitable” in the coming months.