Canada: Not a stellar jobs report – NBF

Matthieu Arseneau, analysts at National Bank of Canada’s analyst, point out that despite the numbers of the May employment report, the Bank of Canada could still raise rates in July.

Key Quotes:

“Canadian employment fell by 7.5K in May according to the Labour Force Survey, much weaker that consensus which was expecting a gain of 24K. However, thanks to a one-tick drop in the participation rate to 65.3%, the unemployment rate managed to remain unchanged at 5.8%.”

“Full time employment dropped 31K, offsetting the rise of 24K for part-timers. Hourly earnings were up 3.9% yearon– year (3.6% in the prior month), the highest since 2009.

“The May employment report is not stellar with headline numbers being significantly short of expectations for a second consecutive month. Moreover, the pullback in full-time jobs in May completely erased April’s gain. Total private employment is slightly down, but this is not overly worrisome as it follows a 28K surge in the prior month.”

“Hourly earnings are now running at their fastest annual pace since 2009 thanks to a 0.5% growth in May.”

“This morning’s report does not change our view that the labour market remains tight and will continue to fuel inflation pressures this year. As such we continue to call for a July interest rate hike from the Bank of Canada.”