The unemployment rate in Canada increased to 5.2 percent in May, as the country lost 17,000 jobs, according to the national statistical agency.
This unexpected decline in employment came after a period of strong job growth, with approximately 400,000 new jobs created since September of the previous year.
Desjardins analyst Royce Mendes commented that after a sustained period of significant job gains, hiring experienced a setback in May. Most of the job losses were in full-time and self-employed positions.
The sectors that saw the largest decline in employment were business, building, and other support services (-31,000), as well as professional, scientific, and technical services (-13,000). However, there was an increase in employment in manufacturing (+13,000), “other services” (+11,000), and utilities (+4,200).
Mendes also noted that the total hours worked decreased by 0.4 percent in May, which he described as unfavorable. However, he highlighted that wage numbers remained positive, with an annual pace of over five percent.
RBC assistant chief economist Nathan Janzen pointed out that more economic data is expected to be released before the next interest rate announcement in July.
The Bank of Canada, which had paused its aggressive monetary policy in March to combat inflation, recently raised its key lending rate to 4.75 percent. Janzen stated that future data releases are likely to show softer results, but it would take further negative surprises to change the plans for another rate hike in July.
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