Canada’s unemployment rate continued its upward climb in May, rising slightly to 6.2 percent as opportunities became harder to find for prospective jobseekers.
Statistics Canada’s latest labour force survey showed the economy added 27,000 jobs last month—too modest of a gain to keep the unemployment rate from rising by a tenth of a percentage point.
The report, which came in largely as forecasters had expected, suggests the Canadian job market continues to soften as high interest rates weigh on consumers and businesses.
“It didn’t take much digging to unearth the fact that this report is considerably softer than the headline, as all of the gains were in part-time jobs, in one province (Ontario), and the unemployment rate ticked up to 6.2 percent, as expected,” wrote BMO chief economist Douglas Porter in a client note.
Of those who were unemployed in April, just under a quarter found work the next month, the report said. That’s below the pre-pandemic average of 31.5 percent for the same months in 2017, 2018 and 2019.
“A lower proportion of unemployed people transitioning into employment may indicate that people are facing greater difficulties finding work in the current labour market,” the report said.
More Canadians are also finding themselves working part-time because they don’t have better options.
Statistics Canada says the involuntary part-time rate, which refers to the proportion of part-time workers who could not find full-time work or worked part-time because of weak business conditions – was 18.2 percent in May. That’s up from 15.4 percent a year prior.
Meanwhile, U.S. employers added a strong 272,000 jobs in May, accelerating from April and a sign that companies are still confident enough in the economy to keep hiring despite persistently high interest rates.
The data from both Canada and the U.S. come two days after the Bank of Canada opted to lower interest rates for the first time in four years, citing easing inflation and the weakening economy.
The central bank lowered its key interest rate by a quarter of a percentage point to 4.75 percent and signalled that more rate cuts would be on the way, so long as inflation continues to slow.
“Taken together, this mixed bag doesn’t really move the needle on the Bank of Canada rate-o-meter. It’s still consistent with growing slack in the economy, albeit with sticky wages,” Mr. Porter wrote.
Wage growth remained strong in May as average hourly wages rose 5.1 percent from a year ago, reaching $34.94.
Employment was up in health care and social assistance, finance, insurance, real estate, rental and leasing, business, building and other support services as well as accommodation and food services.
Meanwhile, employment fell in construction, transportation and warehousing and utilities.
