Canada sheds 17,300 jobs in first decline in nine months

CANADA’S economy ended its eight-month run of employment gains with minor job losses, mostly concentrated among youth and self-employed people. 

The country shed 17,300 jobs in May while the unemployment rate rose 0.2 percentage points to 5.2 per cent, the first increase since August, Statistics Canada reported Friday in Ottawa. The figures missed expectations for a gain of 21,300 positions and a jobless rate of 5.1 per cent, according to the median estimate in a Bloomberg survey.

Bonds rallied, and the Canadian dollar gave back earlier gains versus the US dollar. The yield on the two-year Canada bond declined about 7 basis points to 4.482 per cent at 8.39 am. 

May’s data ended the longest run of job gains since 2017 in which 423,900 positions were created. The magnitude of job losses, however, was considered statistically insignificant, and didn’t even offset half the gains seen in April. Losses were accompanied by robust wage gains of more than 5 per cent yearly pace for the fourth straight month, highlighting a still-tight labour market and an economy that’s proving resilient in the face of higher borrowing costs.

After an unexpectedly strong start to the year, Canada’s jobs market had been still showing momentum into the second quarter. A tight labour market, on top of strong economic growth, sticky inflation and a rebound in housing market activity, prompted Governor Tiff Macklem and his officials to raise the overnight lending rate to 4.75 per cent on Wednesday after declaring a pause on hikes in January. Policymakers said excess demand in the economy “looks to be more persistent than anticipated.”

In May, total hours worked fell 0.4 per cent on a monthly basis, the most since April 2022, and were up 2.2 per cent compared with a year earlier. The participation rate was down 0.1 percentage point to 65.5 per cent in May, mostly reflecting a decline in the participation rate for youth aged 15 to 24.

SEE ALSO

Bank of Canada hikes rates to 4.75%, highest in 22 years

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The employment rate declined 0.3 percentage points to 62.1 per cent, as employment didn’t keep up with the pace of strong population growth.

Job losses were led by decreases in the business, building and other support services sector, which includes activities that support the day-to-day operations ranging from waste management to administrative services.

Employment declined in Ontario, Nova Scotia and Newfoundland and Labrador, while it rose in Manitoba and was little changed in other provinces. BLOOMBERG