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Canada's May unemployment rate rises for first time in nine months to 5.2%

Kitco News

OTTAWA, June 9 (Reuters) - Canada unexpectedly shed jobs in May and the unemployment rate rose for the first time in nine months, data showed on Friday, a first sign of job-market softness after the central bank hiked rates this week, in part because of the tight labour market.

The economy shed a net 17,300 jobs in May, entirely in full-time work, while the jobless rate inched up to 5.2%, Statistics Canada said.

Analysts surveyed by Reuters had forecast a net gain of 23,200 jobs and for the unemployment rate to edge up to 5.1% in May after staying at 5.0% since December.

A series of surprisingly strong economic data and stubbornly high inflation led the Bank of Canada to raise its overnight rate to a 22-year high of 4.75% on Wednesday. Markets and analysts forecast another increase in July as the bank struggles to bring down inflation that remains far above its 2% target.

"Some cracks appeared within the Canadian labour market in May, but these may not yet be wide enough to convince the Bank of Canada that inflation is about to meaningfully cool off," said Andrew Grantham, senior economist, CIBC Capital Markets.

Employment for youth aged 15 to 24 dropped by 77,300 jobs in May, more than offsetting the nearly 63,000 gained in the core 25 to 54 age group. The net job losses capped an eight-month upward trend in employment gains.

The average hourly wage for permanent employees - a figure the Bank of Canada watches closely - rose 5.1% from May 2022, a notch lower than April's 5.2% year-over-year increase.

Employment in the goods sector increased by a net 22,800 jobs, led by manufacturing, while the services sector lost a net 40,100 jobs, largely in business, building and other support services.

The Canadian dollar was trading nearly unchanged at 1.3351 to the greenback, or 74.90 U.S. cents, after earlier touching a one-month high at 1.3317.

Reporting by Ismail Shakil and Steve Scherer in Ottawa; adttional reporting by Fergal Smith in Toronto and Dale Smith in Ottawa; Editing by Susan Fenton, Nick Macfie and Jonathan Oatis
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