Canada cranks out 25,000 jobs

The Canadian economy added 24,700 jobs in May, a robust showing after a massive increase in the previous month.

Economists had expected a more modest increase of 15,000, particularly following April's oversized gain of 108,000.

Despite the increase, the unemployment rate stayed unchanged at 8.1 per cent, Statistics Canada said Friday. That's largely because of growth in the labour force overall, BMO economist Benjamin Reitzes noted.

Several underlying factors in the May numbers pointed to a labour market that is returning to health quickly after the 2008-09 recession. Since the market started improving in July 2009, employment has risen by 1.8 per cent or 310,000.

On Tuesday, Bank of Canada governor Mark Carney boosted interest rates for the first time in nearly three years because the economy was showing signs of improvement. "[This jobs data] reinforces the Bank of Canada’s rationale to hike rates earlier this week," Reitzes said.

Job gains would have been stronger but for the loss of 42,500 part-time workers and 28,000 from the self-employment ranks.

May saw a 67,300 increase in full-time workers, an indication employers are increasing work hours as they step up production. There was more good news in the May numbers: regular employment rose dramatically by 52,800 jobs and the private sector added 43,400.

Even the summer labour market for students showed signs of normalizing, with 54,000 more students aged 20 to 24 finding employment last month, an increase of 3.1 percentage points, compared with May 2009 when the economy was in a deep slump.

The job market has now recouped about 75 per cent of the losses suffered during the recession. Among core-aged workers, women have fared better than men by almost two-to-one.

The government agency said the key gains last month came in the transportation and warehousing industries, as well as health care and social assistance, and public administration.

Construction, which has been strong of late, was little changed last month, as was the factory sector.

There were also setbacks in the accommodation and food services sector, information, culture and recreation, and in natural resources.

Regionally, all provinces except British Columbia and Prince Edward Island saw employment rise or remain steady in May, with Ontario registering the biggest increase with 17,700 more jobs.

U.S. concerns

Reaction to the jobs data was universally positive, as Canada has now posted strong gains for the fifth month in a row. However, economists question how long Canada can keep cranking out job growth while its southern neighbour's economy wobbles.

U.S. data released Friday showed the U.S. added 431,000 jobs in May, but 411,000 of those were temporary jobs created by the government to conduct the national census.

"Canada can't decouple from the U.S. and Europe for long," said Brian Bethune, IHS Global Insight's Canadian chief economist. "Canada has to sleep in the same bed as the U.S. and to presume there can be stronger growth sustained in Canada than the U.S. is just a pipe dream."

Bethune said there were already signs of a slow down: May's jobs data contained a slight decline in the export-oriented goods producing sector. That construction jobs fell might be an indication the housing boom has ended, he said.