On the heels of Friday’s weak jobs report, Bay Street economists expect the Bank of Canada ton announce a 25 basis point rate cut this week.

National Bank Financial says that the May employment report was, “a disappointment given that the gains were in part-time jobs and very narrowly distributed among industries. In fact, outside manufacturing — which reported an unsustainable jump on the month — employment losses were the most pronounced in five years (-25,800).”

“While a month does not a trend make, the message remains one of softening conditions: the all-important service sector has created only 10,000 jobs in the last three months. What’s more, with full-time employment down in two of the last three months, total hours worked are already contracting 1.4% an annualized rate with only one month to go in the quarter,” NBF adds.

It concludes that this morning’s employment report is consistent with another quarter of soft economic growth in Canada that will tilt the Canadian economy in a position of excess supply for the first time in four years. “Under these circumstances, we fail to see why the Bank of Canada would shy away from lowering its benchmark rate by another 25 basis points on June 10,” it concludes.

BMO Capital Markets says that the report is unlikely to make a big dent in next week’s Bank of Canada decision, but it believes it “raises the probability that it will be ‘one and done’ for further rate cuts.”

“We expect the Bank of Canada to follow up its recent round of rate cuts of 150 basis points with a 25 basis-point ease at next week’s fixed action date,” agrees RBC Capital Markets. “However, it is likely to be the last rate change for while as the downside risks to the economic outlook that the Bank has been focusing on are, at the margin, starting to fade. Most likely the Bank will slip into data-watching mode like the U.S. Federal Reserve. As long as the economy picks up pace in the second quarter, as we expect, the Bank of Canada will be in position to hold the policy rate at 2.75% for the remainder of the year.”

CIBC World Markets notes that a quarter-point rate cut on Tuesday isn’t quite fully priced in. “We should get a rally in short-term bonds and a weaker Canadian dollar if, as we expect, the Bank delivers that move and doesn’t exclude the possibility of a further cut down the road,” it says.

TD Economics also believes the Bank will deliver a 25 bps cut. “Looking forward, the trend in employment growth is relatively unchanged, high oil prices continue to put pressure on prices economy-wide, and the 3-month annualized rate of core consumer inflation is running at 2.9%. None of these is yet suggestive of the need for an immediate and ongoing cycle of rate cuts, and as a result, we believe the Bank is likely to signal at least a near-term pause,” it says.

“However, looking ahead, we believe inflation pressures will not be nearly as pronounced at the three-month trend might suggest,” TD says. “Also, with slack building in the economy as a result of lacklustre GDP and employment growth, the Bank is still likely to cut interest rates further to 2.25% by the end of this year.”