The Canadian labor market sparked back to life in May, with the 88,000 gain in jobs well above consensus expectations and taking the unemployment rate back down to 6.6%, said CIBC after Friday's Labour Force Survey (LFS).
Job gains were driven by full-time work, with the sector breakdown showing particularly strong growth in construction, information & recreation, transportation and manufacturing, noted the bank.
However, while much stronger than expected, the release should be viewed in the context of the weakness seen earlier in the year, pointed out CIBC. The six-month average for employment is still slightly negative, at 2,000 lower, and the unemployment rate is still a touch higher than the recent low recorded in January.
Statistics Canada noted that students seem to be seeing a better start to the summer job market than in recent years, and the unemployment rate for 15-24 year olds fell by almost 1% to 13.4%. Prime-aged (25-54) unemployment also fell from 6% to 5.6%.
Hourly wage growth for permanent employees was weaker than expected at 3.2%, suggesting that many of the new jobs picked up this month may have been lower-paying, stated the bank.
For the Bank of Canada, Friday's release shouldn't change the current on-hold stance, even with the large headline beat.
For now, Friday's strength has brought Canada back to where it stood earlier in the year, and further tightening in the labor market will need to be seen -- alongside an acceleration in core inflation -- to bring the BoC off the sidelines, added CIBC.