TORONTO — Employment employment in Canada jumped a much-stronger-than-expected 55,000 in May while markets expected a 15,000 gain, RBC Economics reported.
Full-time employment was up 77,000 to more-than-offset a 22,000 drop in part-time jobs. The unemployment rate inched up to 6.6 percent from 6.5 percent in April as labor force participation rose, said Nathan Janzen, RBC senior economist.
Year-over-year wage growth for permanent employees remained modest but rose to 1.0 percent from the all-time low 0.5 percent in April.
“The jump in employment in May continued an unusually long streak of gains for a survey that is typically very volatile,” said Janzen. “The 55,000 surge in employment marked the 16th gain out of the last 18 months. Average growth over that period has been 21,000.
“The unemployment rate ticked up to 6.6 percent from the cycle-low 6.5 percent in April but because of a jump in the labor force,” he explained. “The measure was still down 0.3 percentage points from a year ago and there is little evidence that factors like worker discouragement or involuntary part-time employment have been behind recent declines. The labor force participation rate is close to all-time highs when controlling for the aging of the population.”
Wages remain the soft-spot although annual growth in permanent employee wages rose to 1.0 percent from the all-time low 0.5 percent increase in April, he added.
“Other wage measures have, though, been somewhat stronger. Compensation-per-hour worked was up 2.5 percent year-over-year in the first quarter and wage growth in the alternative ‘SEPH’ labor force survey for Canada was 2.4 percent year-over-year in March,” said Janzen.
“Strengthening in labor markets and stronger recent GDP growth numbers increasingly argue that current ultra-low interest rates may no longer be needed to support the economy,” he explained. “We nonetheless, continue to expect slow wage growth, lack of upward pressure in consumer prices, and uncertainty about U.S. trade policy during the upcoming NAFTA renegotiation will keep the Bank of Canada cautious and don’t expect a rate hike until the first half of 2018.”
SOURCE: RBC Economics press release