Economy unexpectedly lost 7,500 jobs in May as unemployment rate held at 5.8%

The Canadian employment picture was weaker than expected in May, as the country unexpectedly lost about 7,500 jobs, according to figures released Friday by Statistics Canada.

The average expectationof 14 forecastswas for the country to add just over 22,000 jobs last month, Bloombergsaid.

Despite the small drop in the number of people working, the national unemployment rate held steady at 5.8 per cent last month.

Full-time employment dropped by 31,000 in May, but that was offset by a rise in part-time work ofabout 23,600 jobs for the month.

Statistics Canada said employment for men and women in the core working ages of25to54 both fell by about 19,000 in May. The unemployment rate for men in this age group held steady at five per cent, while it increased by0.2percentage points to4.9 per centfor women

Provincially, employment increased in Prince Edward Island, while it decreased in British Columbia and Nova Scotia. Among the otherprovinces, little change in the job situation was seen.

P.E.I.added800 jobs in May as the provincial unemployment rate fell by1.9percentage points from April, to9.3 per cent.

In B.C., employmentdropped by12,000in the month. Statistics Canada said that for the first time since May2015, employment there showed virtually no growth on a year-over-year basis. The unemployment rate in the province, however, remainedat4.8 per centin May.

The jobless rate in Alberta eased to 6.2 per cent from the 6.7 per cent seen in April.

Wage pressures

Economists suggested Friday's subdued job report won't be enough to keep the Bank of Canada from boosting a key interest rate next month. They pointed to wage growth figures included in Friday's report as a potential factor in that pending rate decision.

Scotiabank economist Derek Holt said wage growth in May accelerated to 3.9 per cent year-over-year for permanent employees the fastest wage growth since July 2012.

"Finally, Canadian workers are getting wage gains that are outstripping the rising cost of living," Holt wrote in a commentary. "This is hawkish at the margin as it reinforces wage and price pressures in the Canadian economy."

TD senior economist BrianDePrattosaid theBank of Canada "may not be encouraged by all the details of today's report, but wage growth nearing [four per cent year-over-year]will be certain to garner discussion."

"All told, there is little in today's report to alter our view that the [Bank of Canada] remains likely to hike its policy rate in July, switching into 'hold and assess' mode thereafter."

Summer student work

Statistics Canada also offered its first look of the year at the summer job situation for students.

The federal agency said employment among20- to24-year-old students who had been in school full-time studentas of March was virtually unchanged in May. The unemployment rate for the group was 13.6 per cent, which was relatively unchanged from May2017.

For students in the 17-19 year old range, there were33,000fewer of them working in May compared with the same monthin2017, with the drop entirely due to a decrease in part-time work. The unemployment rate for the younger group of students remained at 14.6 per cent.