Canada's May job gains exceeds forecasts; wage growth accelerates
TORONTO (Reuters) -The Canadian economy added more jobs than expected in May, the jobless rate ticked up to 6.2%, and the growth-rate of wages accelerated to a four-month high, data showed on Friday.
The economy added a net 26,700 jobs, more than the 22,500 job gain forecast by analysts in a Reuters poll.
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COMMENTARY
ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY AT DESJARDINS
"The rising unemployment rate is enough to keep the Bank of Canada on track to reduce rates again in July. That said, there are a significant number of data releases between now and then. Government of Canada yields are up, but that’s mostly in sympathy with the move in US Treasuries. With strong data out in the U.S., the Canadian dollar is losing ground on the day."
STEPHEN BROWN, DEPUTY CHIEF NORTH AMERICA ECONOMIST, CAPITAL ECONOMICS
"The further rise in the unemployment rate in May shows that the labour market continues to loosen, but the surprising pick-up in wage growth still provides reason to be cautious about the idea that the Bank of Canada will cut interest rates again at the next meeting in July."
ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES
"The increase in the wages data may give the BoC a little bit of concern. But ultimately our thesis is that with the employment rate continuing to tick higher we should see wage growth moderate in the months ahead."
"This probably shouldn't change the calculus on the BoC's current policy path. We believe they will cut rates again in July ... It's a weak enough increase in employment, given the unemployment rate change, for the BoC to feel comfortable cutting rates again at the next meeting."
JULES BOUDREAU, SENIOR ECONOMIST, MACKENZIE INVESTMENTS
"Little bit of an ugly job report. The headline number is decent around expectations but the mix isn't great. The biggest worry is that the wages have gone up and that's a problem for the Bank of Canada. We know that in the past they were hesitant to cut rates because wages were rising too quickly and now we are seeing a bump, not a huge one but from last month's 0.2% pace of increase to 0.4%.
"The Bank of Canada could be hesitant (to cut rates in July), but it was hesitant even before this data came, so this is not going to change that. They are going to be hesitant because they want to go slow."
(Reporting by Fergal Smith, Nivedita Balu and Divya Rajagopal; Editing by Fergal Smith and Chizu Nomiyama)
