OTTAWA – Canada’s labor market continued to tighten in May as the unemployment rate hit an all-time low and wages continued to rise, keeping pressure on the Bank of Canada to keep raising interest rates. interest.
Statistics Canada said on Friday that the economy added 40,000 jobs in May, driven by a rise in full-time jobs, while the unemployment rate fell to 5.1 per cent, the rate lowest since at least 1976, which is as far as comparable data.
The unemployment rate was 5.2% in April.
The increase in employment came as average hourly wages for all employees rose 3.9 percent year-on-year in May, compared with a 3.3 percent increase in April.
BMO Capital Markets CEO Benjamin Reitzes said the job market was still in very good shape in May.
“There’s really nothing in this report that deters the Bank of Canada from maintaining its aggressive tone and moving forward with more aggressive rate hikes,” Reitzes said in an interview.
The Bank of Canada raised its key interest rate last week by half a percentage point to 1.5 per cent in an effort to help control inflation, which is at a three-decade high. The annual rate of inflation rose to 6.8% in April, the fastest year-on-year increase in 31 years.
Raising its key policy rate, Reitzes said the central bank said it was willing to act more forcefully if necessary, suggesting it could raise rates even faster, including the possibility of a three-quarters rise. percentage point.
“I don’t think there’s anything in this employment report that pushes them to be even more aggressive than that, but it certainly doesn’t deter them,” he said.
As the Bank of Canada has raised interest rates, raising the cost of borrowing, the real estate market has shown signs of cooling from its torrid pace.
However, the economy as a whole has continued to grow and, especially for the Bank of Canada, the pace of inflation has shown no signs of slowing down.
The story goes on
Labor earnings in May came when the number of full-time jobs rose to 135,000 in May, but part-time employment fell to 96,000.
TD Bank senior economist James Orlando said that as Canadians headed to the courtyards and hit the road for the overdue holidays, employers continued to look for workers to meet growing demand.
“This has job vacancy rates at record levels, making it clear that the Canadian economy is operating beyond full employment,” Orlando wrote in a report.
The services sector registered an increase of 81,000 jobs, as accommodation and food services increased by 20,000 jobs. The number of professional, scientific and technical service jobs grew by 21,000, while education services gained 24,000 jobs and retail added 34,000 jobs during the month.
Transportation and storage lost 25,000 jobs, while the number of jobs in finance, insurance, real estate, renting and leasing fell by 19,000.
Meanwhile, the goods-producing sector lost 41,000 jobs during the month, as 43,000 jobs were lost in manufacturing.
Long-term unemployment, people who had been looking for work or had been on temporary leave for 27 weeks or more, accounted for 19.7 percent of total unemployment in May, compared to 15.6 percent of February 2020.
This report from The Canadian Press was first published on June 10, 2022.
Craig Wong, The Canadian Press