Canada’s jobless rate rises slightly in May, wage growth likely to remain weak for now

Canada’s labor markets leapt forward in May. The nation added a strong 54.5k net jobs in the month. The earlier month’s fall in the labor force more than reversed, sufficient to move the jobless rate slightly higher to 6.6 percent. Full-time work mainly led the gains, rising 77k positions, while part-time employment dropped 22.3k positions on net. Canada has added 185.1k net full-time positions so far in 2017, much ahead of the 27.9k net added at the same point in 2016, noted TD Economics.

Private sector mainly led the way, added 59.4k net jobs, more than reversing April’s drops. The public sector continued to be a net job creator as well. Job creation was observed in both the goods producing and service producing sides the economy. The goods side mainly drove manufacturing as the other major sectors turned in flat performances. Within services, transportation insurance, professional services, trade and health care performed greatly. On the contrary, finance, insurance, leasing and real estate saw a loss of 17.4k net positions and a major decline was also seen in information, recreation and cultural.

Region wise, Quebec, Ontario and British Columbia led the gains. Job growth in other provinces were mainly flat. Markedly, a contracting labor force in Quebec led the jobless rate down to 6 percent from 6.5 percent, while in Ontario it was the opposite story as rising participation swamped job gains, leading to a 0.7 percentage points rose in the jobless rate, to 6.5 percent.

Hours worked rose modestly 0.7 percent year-on-year, while the hourly wage rate rose 1 percent year-on-year, a rebound from the record slow rate recorded in the prior month.

The jobs report for May gives further indication that Canada’s economy is expected to stay quite robust in the second quarter, said TD Economics. Wage growth is expected to be soft for now, but the healthy labor market, including solid core participation rates, might carry on with the upward pressure in wages, and prices more generally.

“We remain of the view that the pieces are falling in place to allow the Bank of Canada to begin tightening monetary policy early next year”, added TD Economics.