Based on the latest set of labor market indicators, the US economy has once again outperformed the Canadian economy. The May NFP showed a 217,000 increase in hiring versus the estimated 214,000 gain while the Canadian employment change figure showed a mere 25,800 increase in hiring. Recall that Canada lost 28,900 jobs in the previous month and the May increase wasn’t enough to make up for these.
As for the jobless rate, the US figure managed to hold steady at 6.3% even as the participation rate showed a strong improvement. This is a sign of labor market confidence, as more Americans returned to the workforce and continued to look for full-time work.
In Canada, the jobless rate ticked higher from 6.9% to 7.0% reflecting a growing slack in the sector. Components of the employment change report revealed that much of the gains were a result of part-time hiring and that full-time employment declined in the period. Analysts say that this reflects a potential structural shift in the Canadian economy, which is affected by an aging population.
US Jobs Market Outlook
Economists predict that the US economy could continue to post growth in hiring, along with a pickup in wage inflation. For the month of May, average hourly earnings showed a 0.2% uptick after staying flat in April.
From a larger perspective, the latest jobs figures shows that Canada has made a 0.5% increase in jobs for the past twelve months while the US economy has marked a 1.7% gain. This goes to show that the Canadian jobs market pales in comparison to that of the US and that more labor market weakness might be in the cards for Canada.
The FOMC has acknowledged the pickup in hiring but mentioned that further improvements are needed before the central bank considers tightening monetary policy. Meanwhile, the BOC has expressed concerns about inflation, suggesting that there are still plenty of economic headwinds to face before the Canadian central bank thinks about hiking rates.
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