Canada’s employment data for May came in slightly better than projected. The economy added 14,000 new jobs. Meanwhile, the jobless rate dropped by two ticks to 6.9 percent. However, the decline in the jobless rate is not that positive as it seems since it was mainly due to lower labor force participation rate that includes core-aged workers. This does not indicate a healthy economy, said TD Economics in a research report. Jobless rate in likely to rise back in the months to come.
May’s employment data was mixed. Full-time employment was up 61,000, which was majorly countered by 47,000 part-time work. Main hiring took place in the public sector that recorded a rise of 30,000, whereas private sector employment and self-employment did not register much change.
Within industries, goods-producing sectors drove modest growth in employment, rising 0.1 percent on sequential basis, whereas hiring in services sector was flat. Meanwhile, jobs in resources sector were shed. Employment in the sector is 10 percent below the level seen one year ago.
Moreover, employment in trade was also weak (-1.5 percent m/m). According to Statistics Canada, most of the losses were due to the retail sector. Meanwhile, hiring in other services rose 3.2 percent last month, whereas in public administration hiring grew 2.1 percent.
Region wise, hiring in Ontario and Quebec rose in May, with jobless rates declining markedly in both the provinces. Alberta recorded job losses, with the jobless rate rising to 7.8 percent in the region. The focus is mainly on the divergence in job market performances in regions of Canada. The national jobless rate has been the same in the past six months.
There have been marked rise in the jobless rate in Saskatchewan, Newfoundland and Labrador, and Alberta. Meanwhile, the unemployment rates have declined in Quebec, Ontario and Nova Scotia. The divergence shows the country’s current adjustment to lower commodity prices that has continuously been highlighted by the Bank of Canada. The central bank is likely to keep its overnight rate unchanged at 0.5 percent for the foreseeable future, aiding the adjustment process, according to TD Economics.
