TORONTO (Reuters) - Canada's economy gained a net 39,800 jobs in May, entirely in full-time work, Statistics Canada said on Friday. The jobless rate edged down to 5.1%, a new record low.
Employment in the goods producing sector fell by a net 41,200 jobs, mostly in manufacturing. The services sector grew by a net 80,900 positions, mostly in wholesale and retail trade, as well as educational services.
JIMMY JEAN, CHIEF ECONOMIST AT DESJARDINS GROUP
"It remains too hot to handle the Canadian job market... Very importantly, I think it's the wage number that's very impressive - when we look at hourly wages for current workers, leaping to 4.5%... We are now at the top of the range we saw in that last cycle. So it does show that very tight labor market, and that's again evidenced by the decline we saw in the unemployment rate, that's generating traction on wage growth."
"For the Bank of Canada, it's really a tricky situation because the job market is strong. I think we had (Governor Tiff) Macklem saying that they needed to bring down demand for labor in line with the supply. But that's going to be very difficult to do in a smooth way. It's going to obviously require more interest rate hikes. But right now, we're in a situation where we can talk about overheating labor market."
"We continue to think that they're going to be doing 50 basis points in July, and then hiking once more in September. At that point, they might sort of pause and take stock of the impact of those hikes given that we expect to see some early signs of stabilization and inflation."
ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS
"A further solid rise in employment, decline in the jobless rate and sharp acceleration in wage growth places more pressure on the Bank of Canada to continue raising interest rates."
"The solid data and standout wage figure may have investors once again increasing the odds of a 75 bp (basis point) move by the Bank at its next meeting, seeing bond yields rise, although we do have another employment report to be released before that decision is made."
ANDREW KELVIN, CHIEF CANADA STRATEGIST AT TD SECURITIES
"It's a good number, a little bit above consensus on the headline change, but the important thing is that full time part time split is extremely conducive to a strong level of economic activity for the month of May. Additionally, we are starting to see some of the labor market pressures show up a little bit more acutely in the wages data, with average hourly earnings accelerating quite notably on the month."
"It's another signal to the Bank of Canada that they are a little bit behind the curve on their rate hikes. It's another signal that the economy is in excess demand. I think that is the signal the wage data send. And it will add on the margins to the sense of urgency to bring rates higher. And it is going to add to the speculation around a potential 75-basis-point move next month."
DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK
"I'll take the headline but I think the details were soft. The private payrolls component concerns me. There was the big drop in that."
"I don't think it will matter to the Bank of Canada though ... because I think their solitary focus these days is on their inflation target and on the back of the U.S. numbers, I think that would reinforce the perception that we're dealing with continental wide pressures, and so I would look forward to the next CPI report in Canada."
(Reporting by Steve Scherer and Fergal Smith; Editing by Denny Thomas)