Canada Employment Recovers in May, Jobless Rate Climbs

posted on June 6, 2014

By Nirmala Menon, Wall Street Journal | Link to Article

By Nirmala Menon, Wall Street Journal | Link to Article

OTTAWA—Canadian employers hired the largest number of part-time workers in almost four years in May, helping the country’s overall employment recover most of April’s losses. But an influx of job seekers into the labor force pushed the jobless rate up unexpectedly.

Canada added 25,800 net new jobs in May after a 28,900 decline in the prior month, and the unemployment rate climbed for the first time in three months, to 7% from 6.9%, Statistics Canada said Friday.

The job gains almost matched the consensus call for an increase of 25,000, whereas the jobless rate had been expected to stay unchanged, according to a report from Royal Bank of Canada.

Some details of the report weren’t as strong as the headline figure suggested. Job gains were boosted by the addition of 54,900 part-time workers, while the number of full-time jobs fell 29,100. May’s results brought the increase in part-time employment over 12 months to 3.4%, whereas full-time employment slipped 0.2%.

“The underlying details were probably not as encouraging as the headline would suggest,” said David Tulk, chief Canada macro strategist at TD Securities. Furthermore, the six-month average job gain of 3,000 is “not particularly robust in anyone’s estimation” and “speaks to a pace of hiring that is gradually decelerating,” Mr. Tulk said.

The pace of job growth is consistent with a broader economy that is struggling to find traction, with the boost from exports and business investment sought by the Bank of Canada remaining elusive. It also supports the Canadian central bank’s neutral stance on interest rates, Mr. Tulk said.

Earlier this week, the Bank of Canada kept its key interest rate unchanged at the same 1% level it has stood at since September 2010.

Canada’s jobs report came out at the same time as an encouraging U.S. employment report. The U.S. economy added 217,000 net new jobs in May, slightly more than expected, and the jobless rate stood unchanged at 6.3%.

In Canada, industries that posted the largest job gains last month were educational services, up 21,500; accommodation and food services, up 19,500; and agriculture, up 19,300. The biggest losses were in natural resources, where employment declined 23,000, and in finance, insurance and real estate, down 21,000. The manufacturing sector lost 12,500 jobs.

Public sector jobs increased 41,500—the most since August 2010—largely from higher employment in educational services. The number of private-sector jobs increased 24,700 while the ranks of the self-employed shrank 40,400.

Overall, the labor force increased by 40,900. The participation rate, which is the number of employed and the unemployed who are actively looking for work as a share of the population was unchanged at 66.1, the lowest since November 2001.

Meanwhile, there was no sign of wage inflation, with average hourly wage gains slowing to 1.4% year-over-year, the slowest pace since October 2011. The rate for permanent workers grew 1.6% year-over-year, matching April’s figure.

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