All the job gains were part-time, while full-time jobs fell
Canada’s unemployment rate ticked up to 6.2 per cent in May despite adding 27,000 jobs, as economists continue to wager on whether the Bank of Canada will cut interest rates again in July.
The economy added 62,000 part-time jobs in the month, while full-time employment declined by 36,000, Statistics Canada said. The number of people forced to work part time due to the unavailability of full-time jobs was 18.2 per cent in May, up from 15.4 per cent a year ago.
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“There is plenty in May’s jobs data that supports the case for lower interest rates,” Leslie Preston, a senior economist at Toronto-Dominion Bank, said in a note. “The economy has cooled, but it has not fallen off a cliff. We expect that will lead to a gradual pace of interest rate reductions this year, with the Bank of Canada likely to cut at every other meeting.”
Bank of Montreal’s chief economist Douglas Porter was a bit more cautious. He said in a note that while the monthly labour force survey was “consistent with the growing slack in the economy,” the Bank of Canada’s decision will be driven by reports on inflation, which will “shape the July rate decision.”
The Bank of Canada this week cut interest rates for the first time since launching a hiking cycle four years ago to combat inflation in March, as recent data suggested inflation will continue to move towards the bank’s target of two per cent. Economists are now betting on whether the bank will make another cut at its next announcement on July 24.
About 1.4 million people were unemployed in May, an increase of 28,000, or 2.1 per cent, compared to the previous month. About a quarter of the unemployed in April managed to get jobs in May — a figure that’s lower than the pre-pandemic average — signalling that people are facing “greater difficulties finding work” in the market, Statistics Canada said.
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In addition, the proportion of people who have been continuously unemployed for 27 weeks or more — defined as long-term unemployment by the agency — was 18.2 per cent in May, up from 13.2 per cent in August 2023.
The employment rate, defined as the proportion of the population aged above 15 who are employed, declined by 0.1 per cent to 61.3 per cent in May, the seventh decrease in the past eight months.
“Compared with its recent high of 62.4 per cent reached in January and February 2023, the employment rate has fallen 1.1 percentage points, as population growth outpaced employment growth,” Statistics Canada said.
Employment in health care and social assistance increased by 30,000 in May and by about 170,000 in the past 12 months. But the number of construction sector jobs declined by 30,000 during the month and is down by 35,000, or 2.2 per cent, from a year ago.
The number of Canadians working from home declined “notably,” the agency said, as more workers returned to their offices.
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Just 13.2 per cent of employed Canadians were working exclusively from home in May, down 5.5 percentage points compared to the same month in 2022 and 1.2 percentage points lower than last year.
Overall, the monthly labour force survey shows many signs of a cooling job market, economists say, which suggests there could be room for further cuts.
But the Bank of Canada will likely be keeping an eye on the rising average hourly wage for employees in May, which is now $34.94, an increase of $1.69, or 5.1 per cent, compared to last year.
• Email: nkarim@postmedia.com
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