While the Canadian workforce saw the significant addition of 55,000 new jobs last month (the third highest increase in around the past 5 years), the unemployment rate swelled to 6.6 per cent, according to the national statistical bureau.
In Statistics Canada’s latest Labour Force Survey
, the agency revealed that the total hours worked rose by only 0.7 per cent annually in May, compared with the 1.1 per cent year-over-year increase in April.
A concerning aspect of StatsCan’s recent numbers is the real estate labour market’s current situation, markets observer Kevin Carmichael wrote in his recent piece for Maclean’s.
“Employment in finance, insurance and real estate declined on the month, another reason to worry about the housing bubbles in Toronto and Vancouver,” Carmichael explained.
Despite this, however, “the only real negative in the latest labour-market survey is wages. Pay increased 1.3 percent last month from a year earlier, faster than the previous month. But wages still are growing slower than inflation and well below the 10-year average of 2.6 percent.”
“The bulk of recent hiring has been in services, but manufacturing is showing signs of life. Factories added 25,300 positions in May, taking the total increase on the year to 43,000. Also, the majority of new jobs lately are full time, which should support consumer confidence and provide higher pay,” Carmichael added.
A possible knock-on effect of these developments is a shift in the Bank of Canada’s stance towards raising interest rates.
“Economists at Royal Bank
and National Bank
raised the possibility of higher interest rates before the end of the year after the latest jobs numbers were released. Neither analyst was ready to make that his official forecast, but don’t be surprised if Bay Street starts changing its outlook,” Carmichael concluded. “Canada’s official interest rate is at an emergency setting, but there is no sign of economic danger in the employment numbers.”