Canadian jobs report: Not as bad as it looks - NBF

According to Krishen Rangasamy, analyst at the National Bank of Canada, the Canadian April employment report was disappointing but the headline does not signal that the market is struggling.

Key Quotes:

“Canadian employment fell 1.1K in April according to the Labour Force Survey, disappointing consensus which was expecting an increase. However, thanks to a one-tick drop in the participation rate to 65.4%, the unemployment rate managed to remain unchanged at 5.8%.”

“The April employment report is not as bad as it looks. True, the jobs decline was disappointing, particularly losses in cyclical sectors such as manufacturing and construction. But the soft headline number doesn’t necessarily mean Canada’s labour market is struggling. A colder-than-usual April may have temporarily hurt hiring in some sectors.”

“The weakness was also largely due to declines in self-employment and the public sector. But more importantly, private sector employment rose by the biggest amount since November of last year. The tilt towards full-time jobs is also encouraging and largely explains the uptrend in wage inflation.”

“Also positive is the further increase in employment of prime-age Canadians (age 25- 54) which provides support for consumption spending and the housing market.”

“The April jobs report does nothing to change our view that the labour market remains tight and will continue to fuel inflation pressures this year. As such we continue to call for a July
interest rate hike from the Bank of Canada.”