The Average Employee Wage in Canada Approaches $35

The Canadian economy surpassed expectations by adding more jobs than forecasted. However, the jobless rate edged up to 6.2 percent, hitting a 28-month high, while wage growth accelerated to its fastest pace in four months, according to data released on Friday.

The economy saw a net gain of 26,700 jobs, surpassing analysts’ expectations of a 22,500 job increase in a Reuters poll.

The unemployment rate rose to 6.2 percent from April’s 6.1 percent, in line with predictions. Over the past year, the jobless rate has climbed by 1.1 percentage points since April 2023, as indicated by Statistics Canada data.

May’s employment gains were driven by part-time work, which more than compensated for the loss of full-time positions during the month, StatCan reported. The proportion of part-time workers unable to secure full-time employment or working part-time due to unfavorable business conditions stood at 18.2 percent in May, the highest since December 2021.

According to Statistics Canada, the average hourly wage growth for permanent employees increased to an annual rate of 5.2 percent, up from 4.8 percent in April. This growth rate, closely monitored by the Bank of Canada (BoC) for its impact on inflation, reached its highest level since January’s 5.3 percent.

The average hourly wage for Canadian employees rose to $34.94 last month, marking a $1.69 increase from the previous year.

The acceleration in wage growth may raise concerns for the central bank, which recently reduced its key policy rate and indicated that further easing would be gradual and data-dependent. The bank will assess another month of job data before its next rate announcement on July 24, with money markets predicting a 50 percent chance of another rate cut.

In May, employment in the goods sector declined by a net 20,700 jobs, primarily in construction, while the service sectors added a net 47,400 positions, led by healthcare, social assistance, and finance-related jobs.