By James Langton
(June 9 – 10:40 ET) – Today’s employment report topped market expectations. But while this report is being perceived as solid, it’s not shocking enough to get inflation hawks circling.
In May by adding 42,300 new jobs, most of them full-time, pushing the unemployment rate down to 6.6%, a 25-year low. Economists were buoyed by the sign that the gains are real, not just seasonal part-time hiring.
Health care led the hiring parade, as the provinces continue to add nurses. Job numbers increased in the retail and wholesale sectors, technology and manufacturing. Construction work slumped.
BMO Nesbitt Burns Inc.’s Sherry Cooper says, “While this is unquestionably a strong report and supportive for the Canadian dollar, today’s employment result is not so overwhelmingly robust as to prompt the Bank of Canada to take more decisive action.”
Cooper expects the bank to follow the U.S. Federal Reserve Board in any rate action. CIBC World Markets Inc.’s Avery Shenfeld agrees, noting, ” The lower unemployment rate also supports our view that the Bank of Canada will go along with the Fed in hiking rates another half point before summer’s end.”
RBC Dominion Securities Inc. agrees that the bank isn’t likely to change policy on the news, yet it continues to maintain a more sanguine view of the bank’s likely moves. “With the full impact of past rate hikes yet to filter through the economy and with inflation well in hand, we continue to expect the BoC to stand pat on monetary policy.”