Canada’s economy added the most jobs in more than a decade in May led by full-time employment ranging from construction to retailing, suggesting resilience in domestic demand while foreign trade remains weak.
Employment rose by 95,000 in May, the most since August 2002, and the jobless rate fell to 7.1 percent from 7.2 percent even as more Canadians joined the workforce, Statistics Canada said today in Ottawa. The job gain tripled the highest of 25 forecasts in a Bloomberg economist survey that predicted no change in the unemployment rate.
Payrolls have kept rising even with modest output growth in the world’s 11th largest economy, restrained by what the central bank calls the weakest export recovery since World War II. Unemployment will remain at or above 7 percent for another year according to a separate Bloomberg survey.
“No question this is a staggering report, which puts a much healthier glow on the outlook for Canadian growth,” said Doug Porter, chief economist at BMO Capital Markets in Toronto. “However, the volatility in Canada’s employment reports puts a massive warning label on this release.”
The Canadian dollar extended gains after the report, and strengthened 0.7 percent to C$1.0191 per U.S. dollar at 4:30 p.m. in Toronto. One dollar buys 98.13 U.S. cents. Canadian government bonds fell, with the yield on the two-year security rising to 1.13 percent, the highest since February, from 1.05 percent yesterday.
The employment gain was the second largest on record. On a percentage basis, the 0.5 percent increase was the largest since March 2012.
Finance Minister Jim Flaherty said the report is a “good sign” that government policies are working in an e-mailed statement. The data come after Statistics Canada said May 31 that economic growth accelerated to a 2.5 percent annualized pace in the first quarter from 0.9 percent in the last three months of last year.
“It’s providing some support to indications we are seeing stronger growth over the first half of this year over the disappointing second half of last year,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.
Construction accounted for almost half the gains in May, rising by 42,700. The retail and wholesale category rose 27,200, followed by the “other services” category at 21,500 and business and building services at 21,300.
Full-time employment rose by 76,700 in May while part-time work advanced by 18,200, Statistics Canada said. Private companies added 94,600 workers and public-sector employment rose by 6,600. More than 80,000 people joined the labor force in May, pushing the participation rate to 66.7 percent from 66.5 percent.
Ontario, Canada’s most populous province, had its jobless rate decline to the lowest since November 2008, falling to 7.3 percent on a 50,600 job gain.
Workers designated by Statistics Canada as employees rose by 101,200 while the self-employed decreased by 6,200.
Average hourly wages of permanent employees rose 2 percent in May from a year earlier, lagging the prior reading of 2.8 percent.
The labor market still hasn’t returned to where it was before the last recession. Unemployment averaged 6.2 percent in the five years before Canada’s last recession began around the end of 2008, according to Bloomberg calculations.
Bank of Canada Governor Stephen Poloz told lawmakers yesterday the economy suffered long-lasting damage from that recession and likened the global recovery to a postwar reconstruction.
“Canada will have another couple months of strong growth” based on gains in new job listings, Kelly Dixon, president of the Workopolis job-search website, said in a telephone interview. Lowering the unemployment rate will be more “difficult,” she said.
In a separate report, Statistics Canada today said that the nation’s labor productivity rose 0.2 percent in the first quarter, the fastest in more than a year.