OTTAWA (Reuters) - Canada’s economy likely generated only a small number of new jobs in May following the biggest two-month employment gain in more than 30 years.
The median forecast in a Reuters survey of economists is for a small job gain of 10,000, with about a quarter predicting a loss of employment. The Canadian unemployment rate is seen holding at 7.3 percent.
The market is unanimous in its belief that May employment figures are unlikely to repeat the sort of outsized job gains seen in March and April, which averaged almost 72,000 a month.
“The data in Canada has been giving everybody heartache in terms of employment numbers,” said Royal Bank of Canada Chief Economist Craig Wright, whose shop is calling for 10,000 net new jobs.
“You want to smooth it out a bit and look through the monthly wiggles.”
With an increase of 82,300 jobs reported for March, there might seem to have been a disconnect with the fact that gross domestic product only rose by 0.1 percent in the month, as reported on Friday.
“The puzzle is with all those people working, why didn’t we get any output for it,” CIBC World Markets chief economist Avery Shenfeld said.
However, he pointed out that the strength of the March number was largely corroborated by the employer survey released on Thursday, which showed an increase of 49,000 in non-farm payroll employment.
Shenfeld said the March and first quarter growth figures were depressed partly by temporary production issues in the oil, gas and mining sectors, and he predicted “a nice rebound in GDP” in April - which could justify higher employment in March/April.
Wright said he believed the trend growth for Canada was a still respectable 20,000 to 25,000 jobs. With a Canadian population one-ninth that of the United States, it would be as if the U.S. economy would add 180,000 to 225,000 posts a month. In fact, 69,000 U.S. jobs were added in May.
Editing by Jeffrey Hodgson