Canada’s job growth accelerated in May at its fastest pace in eight months, and annual wage growth improved, prompting economists to suggest the Bank of Canada could raise interest rates sooner than anticipated.
Employers added 54,500 jobs last month, Statistics Canada said on Friday, far exceeding forecasts for a gain of 11,000. Driven by full-time hiring, this was the biggest increase since September.
With hiring in both the service and goods-producing sectors, the report adds to evidence of economic momentum after strong growth in the first quarter, analysts said. Bank of Canada Governor Stephen Poloz said on Thursday he was comforted by recent signs of strength.
The unemployment rate rose to 6.6 percent, as expected, as more people looked for work.
“Certainly, the Bank of Canada will find it difficult to ignore a fairly steady stream of positive indicators we are seeing for the economy and the labor market,” said BMO Capital Markets senior economist Sal Guatieri.
“Clearly the odds are shifting toward an earlier Bank of Canada rate increase.”
A separate report showed first-quarter industrial capacity utilization rose to its highest since 2007.
The jobs data led traders to raise their bets modestly for an interest rate hike by the end of the year, with markets pricing a 26.2 percent probability of an increase by December.The Canadian dollar strengthened against the greenback.
Nonetheless, many economists expect the bank to wait until 2018 to raise rates, particularly given policy uncertainty from the United States, Canada’s biggest trading partner.
Friday’s report showed average hourly wages rose 1 percent from a year earlier after annual growth of 0.5 percent in April. The Bank of Canada has pointed to muted pay growth as a sign of slack in the economy.
While wage growth is still slow, economists said the trend was at least improving.
“We’re carving out a bottom on wage growth,” said Bank of Nova Scotia economist Derek Holt.
Statistics Canada’s website went down shortly after the data was released. A water leak from an air-conditioning unit led to a shutdown of an emergency data center, affecting services including the main website, Communications Officer Laurence Beaudoin-Corriveau said.The agency is working to restore services, she said.
The website has been plagued by outages and delays in recent months. The government said in March hackers had broken into a web server at Statistics Canada. They were stopped before they stole any data.
(Additional reporting by Susan Taylor and Alastair Sharp in Toronto, Andrea Hopkins in Ottawa; Editing by Lisa Von Ahn and James Dalgleish)