Data released today showed that Canada’s employment increased by 28K in May above market expectations and the unemployment rate fell to 5.4%, a record low. National Bank of Canada analyst, Matthieu Arseneau, point out the rebound in hours worked bodes well for GDP in Q2.
“The 28K gain, all full-time, is very impressive as it follows a surge of 107K in April. True, the private sector posted a pullback but it is far from being worrisome as it follows a terrific performance in 2019. On a year-to-date basis, employment in Canada is up a whopping 250K, the best start of the year since 2002 with 77% of jobs being full-time and 76% coming from the private sector.”
“While GDP growth in the country experienced a soft patch lately, today’s numbers indicate that it has not been the case for the labour market. If hours worked are any guide, there is reason to believe that the economic weakness of the past two quarters came to an end in Q2. Indeed, hours worked are up 2.6% annualized in the quarter after two months of data, the fastest pace in 7 quarters.”
“While trade disputes remain a concern for growth going forward, a record low unemployment rate and accelerating wages do not suggest that an interest rate cut is needed in Canada at this point.”