Canadian labour market report for May is due on 7 June 2019

TD projecting:

  • employment -5k
  • unemployment rate to 5.8%
  • wages 2.5% y/y

Reasoning:

  • While we acknowledge that the volatility of the LFS makes it difficult to accurately predict the timing of any pullback, we view the risks as disproportionately skewed towards a soft print and think our forecast could prove conservative should such a pullback occur.
  • Previous examples have shown much larger giveback after periods of strength; for example, net employment fell by over 60k in January 2018 after job growth was reported at 140k over 2017Q4.
  • Any giveback should be led by the goods producing sector, with manufacturing in the spotlight after adding 10k jobs over March/April as PMIs dipped into contractionary territory. However, segments of the service-producing sector also appear vulnerable with wholesale/retail trade employment rising by 4.8% (annualized) over the last six months."

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US NFP will get much of the focus, of course: