Canada gains 24,700 jobs in May; unemployment rate remains at 8.1%
Paul Vieira, Financial Post · Thursday, Jun. 3, 2010
OTTAWA -- The Canadian job market continued to churn out jobs in May, adding 24,700 workers -- mostly full-time and in the private-sector -- to payrolls, Statistics Canada reported on Friday.
The May data were well above Bay Street expectations for a 15,000 gain, and has some analysts suggesting this represents more evidence interest rates in Canada will continue to head upward.
“This should up the ante on further Bank of Canada hikes,” said Derek Holt, vice-president of economics at Scotia Capital. “This is simply an astounding jobs report.”
In contrast, the U.S. jobs data for May came in well below expectations, with 411,000 people added to payrolls versus an anticipated 533,000 gain. Particularly disappointing was that gains in private-sector employment, of 41,000, were little changed from the prior month. The anticipation was that the private sector would add 190,000 jobs. As a result, most of the U.S. job gains were temporary hires by the U.S. government to help conduct that country’s census.
John Lonski, chief economist at Moody’s Investors Service, said the U.S. data were “disappointing,” and would mean the U.S. Federal Reserve would be in no hurry to raise its benchmark rate for the foreseeable future. “This tells us the recovery in the U.S. labour market is happening at a snail’s pace.”
The Bank of Canada this week raised its key interest rate for the first time in nearly three years, to 0.50% from 0.25%, as strong domestic fundamentals outweighed worries in Europe. However, its cautious rate statement, which emphasized the risks in Europe, had some analysts questioning whether the central bank would hike rates at its next meeting in mid-July.
The gain of 24,700 jobs comes on the heels of a record performance in April, in which 108,700 people were added to payrolls. The unemployment rate remained unchanged in May at 8.1%, as more people entered the labour market in search of jobs.
The headline May number is smaller than April’s whopping performance, but analysts were nonetheless impressed with underlying data that suggest the recovery has legs.
Full-time employment rose by 67,000 in May, while part-time positions fell by 43,000. The private sector accounted for 43,000 new positions during the month, while there were 28,000 fewer self-employed workers, the agency said.
“Those part time jobs that were taken in lieu of more suitable employment are giving way to more suitable full time jobs,” said Stewart Hall, economist at HSBC Securities Canada. “So too may it be the case that part time jobs have evolved into full time positions as companies respond to increased economic activity.”
The strongest job gains were in transportation and warehousing, and health care and social assistance. Public administration and agriculture were also higher. The biggest declines were in the information, culture and recreation sectors, as well as in the accommodation and food services, and natural resources industries.
Ontario, Alberta, and Newfoundland and Labrador recorded the most robust jobs gains. Meanwhile, average hourly wages rose 2.4% in May, in line with gains in the same month a year earlier.
Employment has risen by 215,200 over the past five months. So far this year, the labour force increased by 166,000 and the participation rate, which fell by close to one percentage point during the recession, has risen 0.3% from its recent low.
“The latest employment data confirm a relatively strong domestic economic recovery that has begun to mature – where incremental gains diminish while becoming self-sustaining,” said Pascal Gauthier, senior economist at Toronto-Dominion Bank.
Yanick Desnoyers, assistant chief economist at National Bank Financial, said that based on statistics from the first two months of the second quarter, total hours worked jumped “notably” to 4.6% annualized, the strongest showing in three years. Meanwhile, wages are up a robust 6.4% annualized, the best showing since the third quarter of 2007.
“Since both labour input and the wage bill are accelerating, it is hard to argue for a slowdown in domestic demand in Canada anytime soon,” he said. “As the Bank of Canada stated [this week], there is still considerable monetary stimulus in place this side of the border.”
