MNI: Canada Jobless Rate Climbs For Eighth Time In 12 Months

Canada's unemployment rate climbed for the eighth time in 12 months in May as record immigration overtook modest job growth, though wage gains remain hot and continue to provide a mixed picture as the central bank switches to figuring out how much to lower interest rates this year. 

Statistics Canada said Friday from Ottawa the jobless rate rose a notch to 6.2%, in line with market forecasts and taking it to the highest since 2017 excluding the pandemic shutdowns. Employment rose by 26,700 on the month, within the survey's margin of error and slightly above the consensus for a 20,000 increase.

The report carried an undercurrent of weakness following the prior gain of about 90,000 jobs, showing increases in long-term unemployment and involuntary part-time work since last year. May's job increase also masked a split between the 35,600 fall in full-time work and a 62,400 rise in lower-paying part-time jobs. Unemployment has climbed about a percentage point over the last year as the 402,000 job gain is swamped by a 1.1 million increase in the population aged 15 and up. 

The Bank of Canada cut its key interest rate a quarter point to 4.75% on Wednesday and said more cuts are justified if inflation continues to moderate. Officials cited evidence that elevated wage gains are cooling while reiterating the risks around those pay rises relative to weak productivity.

Hourly average wage data in the May report continued to show a mismatch, rising 5.1% from a year ago and faster than April's 4.7% pace. Wage growth remains well ahead of 2.7% consumer price inflation.

Still, the 1.6% gain in hours worked over the last year remains consistent with what Governor Tiff Macklem has said is an economy that has opened up some modest slack and has room to grow faster without reversing inflation on track to return to the 2% target next year. Some economists see the Bank cutting again at the July meeting and perhaps twice more by the end of the year. Another danger with rising unemployment is the potential for triggering distress in one of the world's most stretched housing markets especially if slower hiring weakens further into outright layoffs.