EconoFACTS

June 09, 2023 | 09:16

Canadian Employment (May) — No Youthful Exuberance

Economist

Managing Director, Canadian Rates & Macro Strategist
Fixed Income Strategy

Benjamin has been with the Bank of Montreal for over a decade. He is responsible for the Canadian macro-economic... (Read more)

Benjamin Reitzes

Managing Director, Canadian Rates & Macro Strategist
Fixed Income Strategy

Benjamin has been with the Bank of Montreal for over a decade. He is responsible for the Canadian macro-economic... (Read more)

Canadian employment fell 17,300 in May, the first decline in nine months. The details weren't nearly as weak as the headline though, as the entire decline was driven by a 77k plunge in youth employment. Statcan starts to measure the summer jobs market in May, and clearly students are off to a rough start. That was largely offset by a 63k increase in prime-aged (25-to-54 year old) jobs, the largest increase since January. The pullback in employment, combined with a modest increase in the labour force, lifted the unemployment rate two ticks to 5.2%, still historically low, but matching a seven-month high. Full-time jobs slumped 32.7k, while part-time rose 15.5k, driving hours worked down 0.4% in the month, the first decline this year. Even so, hours are still on pace to climb in Q2. Note that while the drop in youth employment is usually thought of as paired with part-time losses, summer employment has a larger full-time component. And, average hourly wages rose 5.1% y/y, down a tick, but still much too high for the BoC's comfort.

Looking at the sector breakdown, goods were the strong spot, climbing 22.8k, led by a 12.9k increase in manufacturing. Services were the area of weakness, with chunky losses in business/building support (-31k), professional services (-13k), and wholesale/retail (-13k). Private sector jobs were up 12.5k, and public sector climbed 10k, leaving all the decline in self-employed (-39.6k). That's the biggest drop in self-employment since April 2020 and the fourth largest over the past decade. Indeed, most of the job gains over the past year have been in the private sector (+3% y/y), while the public sector is up just 0.4% y/y, and self-employment is down 1.4% y/y.

On a regional basis, Ontario accounted for the bulk of the national decline, losing nearly 24k jobs. There were also job losses in the Maritimes (excluding New Brunswick), while there were modest gains through the rest of the country.

Key Takeaway: The headline was clearly weak, but the details weren't nearly as soft. Still, while all the losses were among youth, the higher jobless rate suggests the labour market loosened a touch. We'll still get another jobs report before the July meeting, so the BoC will likely take this mixed report in stride and wait for more data.

Table 1 - Canada — Employment

(change in thousands)

Source: BMO Economics, Haver Analytics