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Labour Report Lands With July Cut Seen As 50/50 Call

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  • Bloomberg consensus sees employment growth of 25k in June after a slightly stronger than expected 26.7k (cons 22.5k) in May following a booming 90k in April.
  • The survey only has nine responses, mostly grouped between 20-25k but with IFSD a huge outlier with 73k. It omits RBC (15k), CIBC (20k), Desjardins (20k) and JPM (30k), so the average tilts a little lower with those included but the median is unchanged at 25k (although a “big six” analyst median is 22.5k).
  • The outright jobs figure will only tell part of the story. Full-time jobs declined by 36k in May to wipe out the 40k increase in April with the largest monthly decline since Aug’22. Said differently, 113k of the 117k jobs added in Apr-May were part-time.
  • It’s well-known that working age population has been surging for some time and this should continue to boost the labour force. As such, consensus sees the unemployment rate increasing further from 6.24% in May to 6.3%, and with a non-trivial skew in analyst responses to a 6.4% reading (4 of 13, if you include CIBC, Desjardins, JPM and RBC).
  • The u/e rate has seen a far more pronounced uptrend than in the US, lifting from 5.0% at the turn of 2023 and with a Sahm-rule equivalent far above a level indicative of recession.
  • One area that remains more hawkish though is wage growth, at least in this labour force survey, which is expected to accelerate again to 5.3% Y/Y for permanent employees after a surprise increase in May.
  • The alternate but far less timely payrolled data paint a recently weaker picture, with employment falling by 23k in April, the vacancy rate of 3.2% declining 0.5pps in two months back to the 3.2% averaged in 2019 and wage metrics running at softer growth rates – see chart.
  • BoC-dated OIS shows an almost 50/50 decision for a back-to-back 25bp cut at the Jul 24 decision. This labour report will be an important input to the meeting but we’re still to see the quarterly BoC surveys (Jul 15) and June CPI (Jul 16). Surprise strength in May CPI saw a notable parring in July cut expectations to around a third at the time.

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  • Bloomberg consensus sees employment growth of 25k in June after a slightly stronger than expected 26.7k (cons 22.5k) in May following a booming 90k in April.
  • The survey only has nine responses, mostly grouped between 20-25k but with IFSD a huge outlier with 73k. It omits RBC (15k), CIBC (20k), Desjardins (20k) and JPM (30k), so the average tilts a little lower with those included but the median is unchanged at 25k (although a “big six” analyst median is 22.5k).
  • The outright jobs figure will only tell part of the story. Full-time jobs declined by 36k in May to wipe out the 40k increase in April with the largest monthly decline since Aug’22. Said differently, 113k of the 117k jobs added in Apr-May were part-time.
  • It’s well-known that working age population has been surging for some time and this should continue to boost the labour force. As such, consensus sees the unemployment rate increasing further from 6.24% in May to 6.3%, and with a non-trivial skew in analyst responses to a 6.4% reading (4 of 13, if you include CIBC, Desjardins, JPM and RBC).
  • The u/e rate has seen a far more pronounced uptrend than in the US, lifting from 5.0% at the turn of 2023 and with a Sahm-rule equivalent far above a level indicative of recession.
  • One area that remains more hawkish though is wage growth, at least in this labour force survey, which is expected to accelerate again to 5.3% Y/Y for permanent employees after a surprise increase in May.
  • The alternate but far less timely payrolled data paint a recently weaker picture, with employment falling by 23k in April, the vacancy rate of 3.2% declining 0.5pps in two months back to the 3.2% averaged in 2019 and wage metrics running at softer growth rates – see chart.
  • BoC-dated OIS shows an almost 50/50 decision for a back-to-back 25bp cut at the Jul 24 decision. This labour report will be an important input to the meeting but we’re still to see the quarterly BoC surveys (Jul 15) and June CPI (Jul 16). Surprise strength in May CPI saw a notable parring in July cut expectations to around a third at the time.