Canada’s jobless rate ticked higher to 5.2 per cent in May, marking the first increase since August 2022 as economists have been watching for any sign of a softening labour market.
Overall employment was little changed last month as the economy lost a modest 17,000 jobs, Statistics Canada reported Friday.
“Today’s negative print ends a streak of eight months of job gains,” said TD director of economics, James Orlando in a client note.
“The question is now: Is this a one-off or the start of a trend? The labour market had been defying gravity for months and was bound for some giveback.”
The job report comes two days after the Bank of Canada raised its key interest rate by a quarter of a percentage point, bringing it to 4.75 per cent, the highest it’s been since 2001.
The decision was prompted by a string of hot economic data, including a surprisingly resilient labour market. The central bank said the resilience of the Canadian economy suggests getting inflation back to two per cent may be harder than it had previously expected.
Canada’s unemployment rate was previously hovering at five per cent for five consecutive months, just above the all-time low of 4.9 per cent reached last summer.
However, the federal agency noted in the report that job growth has moderated in recent months. It says monthly job gains between February and April averaged at 33,000. That follows the economy adding more than 300,000 jobs cumulatively between September and January.
According to Friday’s report, fewer people were working in business, building and other support services as well as professional, scientific and technical services last month.
Meanwhile, employment rose in manufacturing, other services and utilities.
Employment among youth was also down, suggesting a slow start to the summer hiring season.
The central bank has been particularly concerned about how fast wages are growing, arguing that wage growth in the four to five per cent range is incompatible with a two per cent inflation target.
The federal agency says wages were 5.1 per cent higher in May compared with a year ago.
