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Canada loses 17,300 jobs in May, jobless rate rises to 5.2%

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TORONTO (Reuters) – Canada’s economy lost a net 17,300 jobs in May, entirely in full-time work, and the jobless rate rose to 5.2%, Statistics Canada data showed on Friday. Analysts had forecast an increase of 23,200 jobs, and that the jobless rate would rise to 5.1%.

Employment in the goods producing sector grew by a net 22,800 jobs, largely in manufacturing. The services sector was down by a net 40,100 positions, mostly in business, building and other support services, as well as professional, scientific and technical services.

Market reaction: CAD/

STORY:

Link:https://www150.statcan.gc.ca/n1/daily-quotidien/230609/dq230609a-eng.htm

COMMENTARY

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK

“I think the details are a little bit more robust than headline. It’s still not great. You have payrolls up 22,000 or so. So it’s still slowing compared to the torrent of job growth that we had before, but I put more stock in the payrolls number.

“When (central bank) says it’s data dependent, I think they mean it. There’s another jobs report before the next decision, and we get CPI and everything else. So I think there’s still high data dependency. I do think that some of the numbers that we’re tracking into the second quarter in terms of their output-gap framework lean in that direction” toward another hike in July.

ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY, DESJARDINS

“While this is an ugly set of jobs data, the Labour Force Survey is notoriously volatile. As a result, we’ll take this reading with a grain of salt. It would need to be corroborated with a host of additional information to change our view that the Bank of Canada will hike again in July. With population growth once again very strong in May, the underlying strength in consumption and housing is likely to be slower to adjust even if these numbers turn out to be a true reading of employment.”

ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

“Some cracks appeared within the Canadian labour market in May, but these may not yet be wide enough to convince the Bank of Canada that inflation is about to meaningfully cool off.”

“The weak jobs figure will have markets paring back expectations for further interest rate hikes from the Bank of Canada, although policymakers will probably like to see some further softening ahead to convince them that no more rate increases are needed.”

ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES

“It’s a poor number but there are a lot of one-offs contributing to this. If you look at the age breakdown, the losses were really concentrated amongst younger workers, where the sort of seasonally expected increase in youth employment didn’t materialize to the normal extent. So I think you can look at this as a one-off, impacted by that youth employment trend.”

“Additionally, the six-month moving average is still quite firm at about 50,000 jobs. The unemployment rate at 5.2% is still consistent with an economy in excess demand and wage growth didn’t really move that much. So I think if you put that together the Bank of Canada’s narrative doesn’t change tremendously.”

“I continue to look for the Bank of Canada to lift rates by 25 basis points in July.”

(Reporting by Fergal Smith and Steve Scherer; Editing by Denny Thomas)

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