Canada May Employment - Unemployment rising but wages holding up
Canada’s May employment was a mixed bag with a near consensus 26.7k increase in employment and a rise in unemployment o 6.2% from 6.1% giving support to the recent BoC decision to ease rates. However an unexpected acceleration in wage growth does suggest persistent inflationary risk.
The detail of the employment report does not impress, with full time employment down by 35.6k and part time up by 62.4k, though the data needs to be seen alongside a strong 90.4k overall increase in employment in April. With public sector employment down by 7.5k private sector services led the way with broad based gains. Goods fell by 20.7k on a 29.6k plunge in construction. Manufacturing increased by 8.1k.
The unemployment rate of 6.2% after two straight months at 6.1% is the highest since October 2021 and well above the 4.8% low seen in July 2022. The labor force continues to see strong growth, May’s 54.5k rise in line with trend.
The hourly wage rate for permanent employees accelerated to a 5.2% yr/yr increase from 4.8%. This is a 4-month high though April saw a 10-month low. Trend has been fairly close to 5.0% for the past year, suggesting steadily rising unemployment is having a limited impact in restraining wage gains.
