CIBC Research discusses its reaction to today's US and Canada May jobs reports.

"Hiring remains strong in the US in May, with 172K jobs added well above the 88K consensus expectation. Previous two months were revised up, April revised up by 64K and March revised up by 29K. Private sector added 120K jobs, leisure and hospitality added 70K and health care/social assistance adding 47K, remaining strong for the last three months. Government added 52K jobs. The unemployment rate remained steady at 4.3% as expected. The participation rate remains the same at 61.8%. Aggregate hours worked slowed to 0.1% m/m. Wage growth accelerated to 0.3% m/m from 0.2% in April, but overall, the report suggests that the US labor market is on solid footing and remains in balanced territory," CIBC notes.

"The Canadian labour market sparked back to life in May, with the 88K gain in jobs well above consensus expectations and taking the unemployment rate back down to 6.6%.  Job gains were driven by full time work, with the sector breakdown showing particularly strong growth in construction, information & recreation, transportation and manufacturing. However, while much stronger than expected, the release should be viewed in the context of the weakness seen earlier in the year. For the Bank of Canada, today's release shouldn't change the current on-hold stance, even with the large headline beat. For now today's strength has brought us back to where we stood earlier in the year, and further tightening in the labour market will need to be seen (alongside an acceleration in core inflation) to bring the Bank of Canada off the sidelines," CIBC adds.