Canada’s Job Market Takes A Hit With Unexpected Loss Of 17,000 Jobs In May

Canada’s Job Market Takes A Hit With Unexpected Loss Of 17,000 Jobs In May

In a surprising turn of events, Canada experienced a setback in its job market as 17,000 jobs were lost in the month of May, causing the unemployment rate to rise to 5.2 percent, according to the national statistical agency’s report released on Friday.

This decline in employment comes as a shock following several months of robust job gains. Since September of the previous year, the country had seen the creation of approximately 400,000 new jobs, making this downturn an unexpected deviation from the positive trend.

Analyst Royce Mendes from Desjardins expressed his surprise, stating, “After a long string of outsized gains in job growth, hiring apparently hit a rough patch in May.”

Statistics Canada revealed that the majority of job losses were in the full-time and self-employed sectors. The areas most affected by the decline in employment were business, building, and other support services (-31,000), as well as professional, scientific, and technical services (-13,000).

On a more positive note, certain industries experienced an increase in employment. Manufacturing saw a rise of 13,000 jobs, while “other services” and utilities reported gains of 11,000 and 4,200 jobs, respectively.

Mendes also pointed out that the total hours worked saw a decrease of 0.4 percent in May, which he described as an “ugly” figure. However, he acknowledged that the wage numbers remained relatively strong, with an annual growth rate of over five percent.

Nathan Janzen, the assistant chief economist at RBC, emphasized that more economic data is set to be released before the next interest rate announcement in July. The Bank of Canada, which paused its aggressive monetary policy in March to combat inflation, recently raised its key lending rate to 4.75 percent after a series of consecutive rate hikes since June 2022 when interest rates were at record lows.

Janzen believes that upcoming data releases may continue to show softer figures, stating, “We continue to expect data releases to look softer as time goes on.” However, he added that it would likely take more downside surprises to derail plans for another rate hike in July.

As Canada’s job market faces this setback, economists and policymakers will closely monitor future data to assess the health and stability of the country’s economy, weighing the potential impact on monetary policy decisions and the overall financial landscape.