May Jobs Report / Probable July Rate Cut

May Jobs Report / Probable July Rate Cut

In the first major data release since the Bank of Canada cut interest rates last Wednesday, Statistics Canada Labour Force Survey for May showed a marked slowdown from the April surge. Employment was little changed and the employment rate fell 0.1 percentage points to 61.3%, the seventh decrease in the past eight months.

Employment gains were reported in only three provinces in May, led by Ontario, Manitoba and Saskatchewan.

Population growth isn’t likely to slow near-term, which means that anything short of about a 45k employment gain will push the jobless rate higher. The jobless rate rose to 6.2%, 1.4 percentage points above the July 2022 cycle low, and the highest level since 2017 (excluding the pandemic).

TL/DR
This report did not contain anything that would stop another rate cut at the next meeting, with the possible exception of the rebound in wage inflation. Obviously June data might reverse this trend. CPI (inflation) will be the key data release in the coming weeks–reported for May on June 25 and June on July 16.