Canadian Employment Rose In May

: Total employment rose 7.7K in May following astonishing gains of 140.5K jobs in the two previous months. Both full-time (+1.4K) and part-time (+6.3K) jobs edged up. The goods-producing sector was up 11.1K, following a solid gain of 70.0K the previous month. Within the goods-producing sector, manufacturing (+36.4K) and agriculture (+10.7K) were the top performers. The services producing sector edged down (-3.4K), a second monthly drop in a row. Among services producing sector, Information, culture & recreation (-27.3K) and professional, scientific & technical services (-12.5K) were the worst performers while educational services (+25.7K) and trade (+23.6K) alleviate the fall. At the provincial level, only 4 provinces posted increases in employment. Quebec’s (+14.7K) experienced the largest gains while Ontario (- 18.7K) lagged. The unemployment rate remained unchanged at 7.3%.

Opinion: All and all, the May jobs report showed a good performance of labour markets when considering the unusual volatility of the recent data and the surge of employment observed in the two previous months (top chart). Private jobs were down 22.5K during the month but we are not overly worried given the outsize gain of 128.4K in March and April. However, services jobs seem to be in a soft patch as they were down 4 times in the last 5 months and remain below the peak level reached last September.

Fortunately, the goods-producing sector picked up the baton over that period thanks to a particularly solid performance of the manufacturing sector. Over the 6-month period ending in May, the manufacturing sector created 115K jobs, its best showing on record (middle chart). It is true that we are far from having recouped all the jobs lost in that sector over the past years but the recent momentum is impressive. By comparison, Canada (+72K) created more manufacturing jobs in the last three months in absolute terms than the U.S (+63K) – an economy roughly ten times larger. With two months of data in the quarter, the Canadian wage bill is growing at a decent 4.4% pace. This development combined with moderating inflation should support consumption in Q2.