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Jun 07 - 10:55 AM

CIBC: Reactions to Canada and US Jobs Reports: Implications for BoC and Fed

By eFXdata  —  Jun 07 - 09:00 AM


CIBC analyzes the recent employment data from Canada and the US for May, highlighting mixed signals in both labor markets. While Canada saw modest job growth and a rise in part-time employment, the US reported a significant increase in payrolls but also a rise in the unemployment rate.

Key Points:

  1. Canadian Employment Data:

    • Canada added 27K jobs in May, aligning with expectations, but the unemployment rate ticked up to 6.2%.
    • Job gains were predominantly in part-time positions (+62K), with a decline in full-time employment (-36K).
    • The involuntary part-time rate increased to 18.2% from 15.4% a year ago, indicating economic weakness.
    • Wages for permanent employees accelerated to 5.2% y/y from 4.8%, but this series remains volatile and below recent peaks.
    • Total hours worked were unchanged, suggesting GDP growth eased after an April bounce.
  2. US Employment Data:

    • The US added 272K jobs in May, significantly surpassing the consensus expectation of 180K and the previous month’s gain of 165K.
    • Net revisions for the prior two months were -15K.
    • The unemployment rate rose to 4.0%, higher than the expected 3.9%, and the participation rate dipped to 62.5%.
    • Wage growth accelerated to 0.4% m/m, above the consensus expectation of 0.3%.
    • Mixed signals were observed, with payroll data indicating a heating labor market and the household survey suggesting cooling.
  3. Implications for Monetary Policy:

    • The mixed labor market signals suggest the Fed will likely wait for additional data to better understand the state of the labor market.
    • The Fed is expected to place more emphasis on inflation data to assess the overall balance of supply and demand in the economy.


The May employment reports from Canada and the US presented a complex picture with mixed signals. In Canada, part-time job gains and a rise in the unemployment rate indicate economic challenges, while in the US, strong payroll growth contrasts with a higher unemployment rate and a lower participation rate. The Federal Reserve is likely to adopt a wait-and-see approach, focusing on upcoming data to make informed decisions about future monetary policy actions.

CIBC Research/Market Commentary


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