A strong employment report released from Statistics Canada, today, has economists split over whether the Bank of Canada will cut rates 25 or 50 basis points at its next rate meeting.

Canadian employment rose in April with a gain of 25,200 new jobs. This follows 29,700 new jobs in March. All the new jobs are full-time positions. Many are in the services sector. Most of the growth is in Ontario, with some modest gains in Alberta, New Brunswick, and Newfoundland. The unemployment rate remained at 7.0%, due greater labour force participation.

The question analysts are asking is whether the stronger than expected performance will keep the Bank from cutting rates aggressively.

“We remain skeptical of the economy’s ability to sustain its recent pace of job creation, particularly in sectors such as finance, with manufacturing still looking to have considerable downside potential,” say CIBC World Markets analysts. “Today’s stronger-than-expected report raised some doubts over the extent of the Canadian economic slowdown, and could lead markets to reassess the need for the Bank of Canada to endorse further aggressive rate easing”

BMO Nesbitt Burns says, “Two solid months of jobs increases will certainly stimulate debate as to whether the Bank will lower rates by 25 or 50 bps on May 29. But, a 50 bps move would still appear to be in the cards as the Fed is likely to cut by 50 bps next week. Moreover, even with two months of gains, job growth in Canada has cooled and the economy has not yet entered a new phase of robust growth.”

TD Bank says the slower job growth and slowdown in the economy generally justifies further cuts. It’s voting for a 25 bps move. “Today’s unexpectedly buoyant employment data suggest that the Canadian central bank will continue with its recent gradual course of easing, cutting its overnight funds rate by a modest quarter-point at month’s end.”