OTTAWA (Reuters) - Canada added a higher-than-expected 27,700 net new jobs in May and the unemployment rate dipped to a record low of 5.4%, official data showed on Friday, helping push the Canadian dollar up to a seven-week high.
Analysts in a Reuters poll had predicted a gain of 8,000 positions from April and a jobless rate of 5.7%. Statistics Canada said the 5.4% rate was the lowest since comparable data became available in 1976.
Market operators were pleasantly surprised by the figures, which followed a record gain of 106,500 positions in April, but noted the net gain was due entirely to a 61,500 jump in the number of self-employed.
“Another stellar Canada jobs report ... (it) certainly gives us confidence that Canada’s economy is picking up in the spring,” said Sal Guatieri, senior economist with BMO Capital.
The Canadian dollar hit a seven-week high on the data, rising to 1.3302 to the U.S. dollar, or 75.18 U.S. cents.
The Bank of Canada held interest rates steady as expected on May 31, citing evidence that recent economic weakness was temporary and signaling it would remain on the sidelines as it kept a close eye on major data.
Recent Statscan releases have been encouraging. Growth figures for March showed a strong recovery, boosting hopes for a good start to the second quarter, while the April trade deficit shrank to a six-month low.
Employment in the services sector rose by a net 22,800 jobs on gains in healthcare and professional services. The goods-producing sector added a more modest 4,900 positions, thanks to strength in manufacturing.
Statscan said 33,800 public and private sector employees lost their jobs.
Andrew Kelvin, chief Canada strategist at TD Securities, said the May report had defied expectations after April’s monster gain.
“The one thing that is a little bit curious about it, it was entirely self employed ... when you are seeing declines in both public and private sector hiring, it is difficult to be too positive,” he said in a phone interview.
Separately, Statscan said industrial capacity use dropped to 80.9% in the first quarter, the lowest in more than three years, on weakness in the mining, quarrying and oil extraction sector.
Additional reporting by Fergal Smith, Nicola Saminather and Tyler Choi in Toronto; Editing by Steve Orlofsky