The Canadian jobs data continues to surprise economists with its ongoing resilience.

Economists say the strong employment numbers may lead the Bank of Canada to accelerate the pace of planned hikes to interest rates from 25 basis points to 50 bps.

Statistics Canada reported Friday that employment increased for the fifth consecutive month, with gains of 31,000 in May, surpassing expectations.

Still, the unemployment rate edged up 0.1% to 7.7%. All of the unemployment increase occurred among youths as more of them entered the labour market in search of work.

“The Canadian jobs juggernaut just keeps on rolling,” says RBC Financial. It notes that another 31,000 jobs were added in May on top of 207,000 since January 1, “bringing the five-month total to an almost impossible-to-believe 237,000, the largest gain in a similar period since 1994”.

RBC points out that May’s increase was twice what the market was expecting and should be strong positive for the dollar, “mainly because it reinforces the view that the Bank of Canada will be considerably more aggressive in raising rates than the U.S. Fed, widening interest rate spreads between the two countries, but also because today’s U.S. employment numbers were a disappointment.”

BMO Nesbitt Burns points out that May is typically a difficult month to add a lot of jobs on a seasonally adjusted basis. The fact that it did, “clearly demonstrates the strength of the Canadian economy”. BMO says that this report will convince the Bank of Canada to keep hiking interest rates, “and brings a 50 basis point move seriously into play”.

TD Bank agrees, noting, “If last month’s stunningly strong GDP report was not enough, today’s employment numbers are bound to raise eyebrows at the Bank of Canada — heightening the risk that the Bank will up the ante on the interest-rate front in the months ahead.”

Despite the new jobs, the jobless rate rose a tick to 7.7%. RBC admits that this is likely to get some negative press. Although it says, “[this move] reflects optimism about the economy among job-seekers.” It also notes that more of the gains were part-time rather than full-time, and that public sector hiring helped drive the gains.

Nonetheless, TD predicts that close to 150,000 additional jobs could be created during the remainder of the year, which could readily shave half a percentage point off the unemployment rate.

CIBC World Markets says, “Canada’s employment prospects hinge on a sustained recovery in stateside demand — an outcome that remains in some doubt. Nonetheless, even a moderation in the recent pace of job gains should see the unemployment rate trend a bit lower over the balance of the year.”