- Employment increased another 28k in May, building on the outsized 107k increase in April
- The unemployment rate fell to 5.4% — the lowest for comparable data back to 1976
- Wage growth remains soft given the low unemployment rate, but ticked up to 2.8% in May from 2.5% in April.
The gain in employment was the 8th in 9 months for what is normally a very volatile measure – with gains over the period totaling 417k. As always, the labour force survey numbers should be taken with a big grain of salt given wide confidence bands around spot estimates. The unemployment rate also fell to new multi-decade lows, though. The participation rate also dipped, but there is little evidence that worker discouragement is to blame. Broader measures of unemployment from Statistics Canada that include, for example, people who have given up their job search out of discouragement have declined more quickly over the past year than the ‘official’ unemployment count. Wage growth remains surprisingly soft given what otherwise still look like ‘tight’ labour markets, but average hourly earnings growth did tick up to 2.8% from a year-ago in May from 2.5% in April.
The labour market data still looks relatively solid in Canada and growth looks on track to rebound to a 2% rate as expected in Q2 after slowing over the prior two quarters. Risks to the economic outlook from escalating US-led global trade tensions still leave the Bank of Canada with plenty of concerns meaning they will leave interest rates where they are for now.
