Canada Employment Preview: Economy likely created jobs in the range of 8k to 15k

Analysts at TDS and NBF are slightly divided in their view when it comes to the number of jobs created by the Canadian economy as the former is expecting a print of around 8k, while the NBF is expecting a print of 15K for the month of May.

TDS

“We look for the economy to add a relatively modest 8k jobs in May, roughly 10k below the six month trend, while a rebound in part-time employment should add to the downbeat tone. Full time job growth has outperformed part time by 160k over the last two months, leaving us biased towards a correction. Our base case is for unchanged average hourly earnings (3.3% y/y for permanent employees), with risks for a significant acceleration unlikely. This is especially true given the sharp decline in March SEPH wage growth and deceleration in the national and productivity accounts in Q1.

Indeed, our wage tracker of underlying wage growth has slowed to roughly 2.8% y/ y after peaking in January, thereby underperforming the strength in LFS. Finally, after a pullback in labour force participation last month, we expect a partial rebound in May to drive the unemployment rate higher to 5.9%.”

NBF

“According to analysts at the National Bank of Canada, the Canadian economy created 15.000 jobs during May. May’s labour force survey will attract the most attention. Hiring intentions remained high among Canadian businesses according to the CFIB, hinting at a rebound in job creation after a weak showing in April. However, the lack of qualified candidates – the unemployment rate stands at a cyclical low of 5.9% - should put a lid on hiring.

All in all, we expect a +15K print, in line with the long term average for this indicator. That result should allow the unemployment rate to remain unchanged at 5.8%, assuming no major changes to the participation rate.”