Canadian employers reportedly continued hiring at a strong rate last month in an increasingly tight labor market. This has pushed the unemployment rate down to its lowest level and triggered a sharp rise in wage increases.
The Canadian economy managed to add 39,800 jobs in May based on data released by the Canadian Department of Statistics on Friday. The figure also surpassed the expectations of economists who are targeting an increase of 27,500 jobs. The national unemployment rate fell to 5.1%, the lowest since 1976.
Canadian government two-year bond yields rose about 5.5 basis points from its pre-issue level to 3.122%. The Canadian currency changed little after the report was released.
The increase in employment this time around marks a massive shift of part-time to full-time employment which indicates an increasingly tight labor market. Full -time employment jumped by 135,400, with part -time employment down 95,800.
The average hourly wage rate rose 3.9% from a year ago, an acceleration from 3.3% in April.
The figures illustrate the extent to which the country’s labor market is evolving towards a full labor force, yet will be limited without driving up wage increases. The imbalance between job demand and supply is the main reason why the Bank of Canada is tightening monetary policy so aggressively.
While the increase in the number of jobs in May was more than double the increase over the April figure of 15,300, the overall trend slowed as employers struggled to find new employees.
The Canadian economy has added more than 1 million jobs over the past year, with nearly half a million jobs exceeding February 2020 levels. Wage increases in May were among the strongest on record since the 1990s. Employee wage gains remained at 4.5%, up from 3.4 % compared to April.
