no matter how you slice it, canada's labour market continues to soften

Fresh off the heels of the Bank of Canada beginning to unwind its restrictive monetary policy, Statistics Canada has just released its latest update of Labour Force Survey data for the month of May. And while Canada once again saw job growth last month, the underlying data continue to portray weakness in the labour market.

First, the good news: Canada has seen job growth in nine out of the past ten months—including a gain of 26,700 jobs in May. That said, unemployment has been increasing alongside employment as Canada’s working-age population continues to expand at a record-setting pace. Notably, last month’s rise in unemployment was greater than that of employment, leading to an overall increase in the unemployment rate, to 6.2% (accompanied by a decrease to the employment rate to 61.3%).

What’s more, all of the job gains were constrained to a single province, with more than 100% of job growth occurring in Ontario last month. The rest of Canada combined to post a net loss of 22,800 jobs in May.

Likewise, part-time employment gains represented more than the totality of job additions last month, as full-time employment declined by 35,600. And with part-time employment representing a growing share of overall employment, it’s not too surprising that the proportion of part-time workers that want to find full-time work but are unable to is also on the rise (reaching 18% of all part-time workers in May, up from 17% in April).

Overall, the May data point to a labour market that continues to be burdened by high interest rates. Growing unemployment and underemployment show that workers are increasingly unable to find jobs—suitable or otherwise—in today’s environment. And while businesses will benefit from the Bank of Canada’s June interest rate cut in the coming months, interest rates today still qualify as restrictive, with a single 25-basis-point cut being unlikely to have a significant impact on hiring in the near-term. As it stands now, the totality of the latest jobs report reinforces our belief that Bank will cut a further 25 points at their July 24th meeting.