Canada's job gains biggest in seven months, buoyed by manufacturing

Fri Jun 5, 2015 11:56am EDT
 
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By Leah Schnurr

OTTAWA (Reuters) - Canadian jobs growth surged by the most in seven months in May, buoyed by strength in the manufacturing sector, in an encouraging sign following an oil-induced economic slump at the beginning of the year.

The monthly jobs report also showed wage pressures picking up, but it did not alter expectations that Canada's central bank will likely keep interest rates unchanged for now following a surprise rate cut in January.

Canada added 58,900 jobs last month, data from Statistics Canada showed on Friday, handily topping expectations for a gain of just 10,000. A tick up in the participation rate saw the unemployment rate hold at 6.8 percent.

The report was a welcome improvement from April, when Canada lost 19,700 jobs, and raised hopes the economy was rebounding from a first-quarter contraction blamed largely on lower oil prices. Oil is a major Canadian export.

The Bank of Canada expects the economy will regain momentum as the year progresses and that the oil shock likely will have been confined to the early part of 2015.

"All told, nothing not to like in the May jobs figures and perhaps the first signal that the economy is emerging from its first-quarter dive," Avery Shenfeld, chief economist at CIBC World Markets, said in a note.

In another sign of strength, wages for permanent workers averaged C$25.89 ($20.71) an hour, up 2.9 percent from May, 2014. Separate labor productivity data showed average hourly compensation increased by 1.1 percent in the first quarter.

The Canadian dollar CAD=D4 rose against the U.S. dollar before giving up some of the gains as markets reacted to unexpectedly stronger U.S. job gains in May. [CAD/]   Continued...

 
Production Associates inspect cars moving along assembly line at Honda manufacturing plant in Alliston, Ontario March 30, 2015.  REUTERS/Fred Thornhill