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Canada shed 17,000 jobs in May and the unemployment rate rose to 5.2% for the first time in months, the National Bureau of Statistics said on Friday.
The net jobless count was a surprise after strong job growth in recent months. Some 400,000 new jobs have been created since last September.
“Hiring clearly struggled in May after a string of sharp gains in job growth,” said Desjardins analyst Royce Mendes.
Most of the unemployed are full-time and self-employed, according to Statistics Canada.
Employment in business, construction and other support services (-31,000) and professional, scientific and technical services (-13,000) fell during the month, the agency said.
However, employment rose in manufacturing (13,000), “other services” (11,000) and utilities (4,200).
Mendez commented that the 0.4% drop in total hours worked in May “looked bad” and that “the only good reading for workers was the wages data, which is still growing at a rate of over 5% a year. “
RBC assistant chief economist Nathan Janzen noted that more economic data is scheduled to be released before the next interest rate announcement in July.
The Bank of Canada raised its key lending rate to 4.75% this week after becoming the first major central bank to pause its recently aggressive monetary policy in March to fight inflation.
This follows a string of rate hikes starting in June 2022 when rates were at record lows.
“We continue to expect data releases to look softer over time,” Janzen said in a research note, adding that “more downside surprises may be needed to derail plans for another rate hike in July.” .”
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