Canada’s May job gains exceed forecasts; wage growth accelerates

The Canadian economy added more jobs than expected in May and the jobless rate ticked up to 6.2%, data showed on Friday, as a continued increase in population offset the economy’s ability to absorb people coming into the labor market. The economy added a net 26,700 jobs, Statistics Canada said, more than the 22,500 job gain forecast by analysts in a Reuters poll.
The unemployment rate ticked up to a 28-month high of 6.2% from 6.1% in April, matching forecasts. The jobless rate, on an uptrend over the past year, has risen 1.1 percentage points since April 2023, Statscan data showed.

Economists had said that with no slowdown in population growth seen in the short-term, any job additions below 45,000 people would push the unemployment rate higher.

Money markets, which had been betting for an over-50% chance of a rate cut in July, trimmed bets to 44% after the jobs data.

The growth rate of wages accelerated to a four-month high, Statscan said. The average hourly wage growth for permanent employees accelerated to an annual rate of 5.2% from 4.8% in April, data showed. The wage growth rate – closely tracked by the Bank of Canada (BoC) because of its effect on inflation – was the highest since January’s 5.3% rate.

The BoC had warned on Wednesday that if wage growth remains high it could slow progress on taming inflation, after it cut its key policy rate to 4.75% and indicated further easing would be gradual and dependent on data.

The bank will have another month’s job data before its next rate decision announcement on July 24.

The Canadian dollar was trading 0.3% lower at 1.3715 to the U.S. dollar, or 72.91 U.S. cents, as investors also weighed stronger-than-expected U.S. jobs data.

The employment gains in May were driven by part-time work, which more than offset full-time positions lost in the month, the statistics agency said.

It noted that the proportion of part-time workers who could not find a full-time job or who worked part-time due to poor business conditions was 18.2% in May, the highest since December 2021.

In May, employment in the goods sector decreased by a net 20,700 jobs, mainly in construction, while the service sectors gained a net 47,400 positions, led by healthcare and social assistance as well as finance-related jobs.