Canadian Dollar: Softer jobs seen reinforcing dovish tone – TD Securities

TD Securities economists expect Canada’s May employment to rise by 5k versus the market’s 10k, after an 18k loss in April, with the unemployment rate steady at 6.9%. They note mixed business surveys, confirmed job losses in payroll data, and forecast slower wage growth at 4.4% y/y, reinforcing a dovish backdrop for the Canadian Dollar (CAD).

Jobs and wages to cool further

"We look for employment to rise by 5k in May (market: +10k) for a modest rebound from the 18k jobs lost in April as sluggish population growth helps keep the unemployment rate stable at 6.9% (market: 6.9%)."

"Business surveys have painted a mixed picture for hiring, with a sharp pullback in small business hiring intentions while the April PMIs were more upbeat on the employment outlook."

"However, payroll employment has also confirmed material job losses over Feb/Mar, which raises the bar for mean reversion in the May LFS."

"Softer wage growth should add to the dovish tone, with AHE [Average Hourly Earnings] forecast to slow 0.4pp to 4.4% y/y, along with another deceleration for the 6m hiring trend as the stronger performance from Q4 hiring moves further into the rearview mirror."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)