Canada: Employment surprises on the upside - RBC

Nathan Janzen, senior economist at the Royal Bank of Canada, notes that the Canadian employment increased another 28k in May, building on the outsized 107k increase in April while the unemployment rate fell to 5.4% to its lowest for comparable data back to 1976.

Key Quotes

“Wage growth remains soft given the low unemployment rate, but ticked up to 2.8% in May from 2.5% in April.”

“The gain in employment was the 8th in 9 months for what is normally a very volatile measure – with gains over the period totaling 417k.  As always, the labour force survey numbers should be taken with a big grain of salt given wide confidence bands around spot estimates.  The unemployment rate also fell to new multi-decade lows, though.  The participation rate also dipped, but there is little evidence that worker discouragement is to blame.”

“Wage growth remains surprisingly soft given what otherwise still look like ‘tight’ labour markets, but average hourly earnings growth did tick up to 2.8% from a year-ago in May from 2.5% in April.”

“The labour market data still looks relatively solid in Canada and growth looks on track to rebound to a 2% rate as expected in Q2 after slowing over the prior two quarters.”