Jobless rate falls to 2-year low
Canada's unemployment rate has fallen to the lowest level in more than two years as a combination of more jobs and fewer people actively seeking work in May pushed the rate to 7.4 per cent.
Statistics Canada said 22,300 new jobs were created last month, following the previous month's strong 58,000 gain.
That's the lowest jobless rate for Canada's economy since January 2009, a few months after the recession started. The unemployment rate for young workers, which Statistics Canada considers to be people between 15 and 24, fell to 13.9 per cent, down from 14.3.
Early indicators for the student summer job market are also positive, the Conference Board of Canada noted in a report.
Even behind the positive headline number, analysts found reason for optimism in the details of the report.
Full-time jobs were up 32,900 and private-sector employment added 37,100. Both are indications of higher-quality employment.
Finance Minister Jim Flaherty has urged Canadian corporations to start hiring to pick up the slack for the end of government stimulus spending.
The public sector shed 44,300 jobs in the month, likely due to a falloff after the May 2 election, BMO economist Robert Kavcic noted.
"The solid May employment report is good news amid a run of downbeat economic data," Kavcic noted.
A consensus of economists polled by Reuters had been expecting 20,000 new jobs to be made, a drop from April's 58,000 increase.
While most of the jobs gains were full-time, they came in the less desirable self-employment category, which could indicate that many Canadians turned to creating their own employment because they were unable to find more traditional work.
The number of employees in Canada actually dropped by 7,500 in May, and the goods-producing sector of the economy saw a pull-back in employment, with manufacturing taking the biggest hit with 22,500 fewer jobs. The month also showed the public sector is starting to tighten, shedding 44,300 jobs as governments begin dealing with large deficits.
The decline in the number of salaried employees could be viewed as a lack of confidence in the economy by employers.
Indeed, not all analysts viewed the report positively. The drop in the unemployment rate was mostly due to a decline in labour force participation, Capital Economics' David Madani noted.
"Compared to its pre-recession level of 67.7 per cent, the participation rate remains stubbornly low at 66.8 per cent," he noted.
And the hard-hit manufacturing sector shed 23,000 jobs. Despite the decline, employment in the key industry has risen by 25,000 or 1.4 per cent since a low point in May 2010.
At the very least, Canada's economy is doing far better than its southern neighbour and biggest trading partner.
In the past year, Canada has created 273,000 new jobs, most full-time and in the private sector, while the U.S. has struggled to post solid gains. New data released Friday showed the U.S. unemployment rate rose 0.1 per cent to 9.1 in May.
Regionally, employment increased in Quebec, Alberta and Saskatchewan, while Newfoundland and Labrador saw a decline. Other provinces had little significant change.
With files from The Canadian Press