Shrinking labour force cuts Ottawa-Gatineau unemployment rate to 5.4% in May

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Ottawa-Gatineau’s unemployment rate dipped by a tenth of a percentage point in May as the total number of residents with jobs held steady while the overall size of labour force shrank slightly, Statistics Canada said Friday.

The unemployment rate in the region was 5.4 per cent in May, according to the agency’s monthly labour force survey. That’s down from 5.5 per cent in April but still the region’s second-highest mark since December 2017.

Overall, Ottawa-Gatineau’s labour force – which includes people looking for work ​– stood at 790,000 last month, down 600 from April. Meanwhile, the total number of employed residents dropped by 100 people to 747,000.

The region’s largest source of employment, the public-service sector, continued to churn out new jobs last month, adding 2,800 workers to grow its payroll to 171,500. That follows an impressive April that saw the sector gain more than 5,000 jobs.

Another of Ottawa-Gatineau’s leading economic engines, high tech, also continued to pick up steam in May. The tech sector grew by 2,300 employees last month for a total workforce of 47,400 – its highest level since May 2018.

Other sectors that also experienced big jumps in May included professional services (up 2,800), business, building and support services (up 2,600) and transportation and warehousing (up 2,500). Those gains were offset by a significant drop in employment in the educational services sector, which shed 6,500 jobs, and a loss of 2,300 positions in the health-care sector.

Looking at the bigger picture, the Canadian economy showed signs of strength in May as it added 27,700 jobs and the national unemployment rate fell to its lowest level since comparable data became available in 1976.

Statistics Canada said the national unemployment rate fell to 5.4 per cent, compared with 5.7 per cent in April as the number of people looking for work fell sharply.

Economists on average had expected the addition of 8,000 jobs for the month and an unemployment rate of 5.7 per cent, according to Thomson Reuters Eikon.

The better-than-expected increase in the number of jobs – made up entirely of full-time employment as there was no change in the number of part-time jobs – followed a record 106,500 jobs that were added in April.

However, CIBC senior economist Royce Mendes noted that when you drill down into the jobs report, some of the details weren't as good as the headline suggested.

“The details though weren't immaculate, if you look at where the job creation was focused,” he said.

“Yes, it was focused in full-time, which is solid for the Canadian economy, but it was also attributed to self-employment, which tends to be more precarious than paid employment at companies.”

The number of self-employed workers rose 61,500, while the number of employees fell by 33,800, including a drop of 13,100 public-sector employees and 20,700 private-sector employees.

Mendes also noted that hours worked were down for the month.

“So despite having a healthy increase in headline employment, hours worked, which actually translates more directly to GDP, were actually down,” he said.

The jobs report was the latest data point to suggest the economic weakness seen over the winter is on the mend.

On Thursday, Statistics Canada reported the smallest merchandise trade deficit since last October, helped by a rise in exports.

The Canadian economy posted its weakest back-to-back quarters of growth since 2015 in the fourth quarter of 2018 and the first quarter of this year.

However, the Bank of Canada has said that it expected the weakness to be temporary and that the economy would pick up pace throughout the rest of this year.

TD Bank senior economist Brian DePratto said the jobs report will serve to reinforce the Bank of Canada's cautious approach.

“Recent communication attributed weakness in hours worked to caution among employers. That caution clearly remains, and with trade uncertainty elevated, expect the Bank of Canada to stay on the sidelines for some time,” DePratto wrote in a note to clients.

Mendes noted that he'll be looking to upcoming data on wholesale and retail sales as well as the next read on manufacturing in Canada for signs of how the economy is faring.

“Those will provide a clearer indication whether the strong handoff from the first quarter – where we saw monthly GDP in March really post a strong reading – continued into the second quarter in April,” he said.

“That will be the next hurdle for the Canadian economy to really show that some of the weakness that we've seen recently is in the past now.”

The jobs report Friday found the goods-producing sector of the economy added 4,900 jobs, while the services sector added 22,800.

The health care and social assistance industry added 20,400 jobs in the month, while professional, scientific and technical services increased by 17,200.

Business, building and support services lost 19,400 jobs and employment in accommodation and food services fell 12,000.

Regionally, Ontario added 20,900 jobs in May, while B.C. saw the number of jobs rise by 16,800. Newfoundland and Labrador lost 2,700 jobs for the month.

Year-over-year average hourly wage growth for all employees, a key indicator monitored by the Bank of Canada ahead of its interest-rate decisions, was 2.8 per cent in May, up from 2.5 per cent in April.

Compared with May 2018, the Canadian economy added 453,100 jobs, including 299,000 full-time positions and 154,100 part-time jobs.

– With files from the Canadian Press