Canadian Unemployment Rate Jumps To 8.4% As Economy Sheds Jobs

Canadian Employment Change Actual -41.8K, Expected 36.4K, Previous 35.9K
Canadian Unemployment Rate Actual 8.4%, Expected 8.2%, Previous 8.0%

Release Explanation: The release measures the number of jobs created, or the percentage of employed/unemployed in the labor market. “A currency will strengthen or weaken in-line with the other releases that the Employment Data influences, rather than just as a one-off knee-jerk reaction to these numbers printing” TheLFB-Forex.com Trade Desk said.

TheLFB-Forex.com Trade Desk Thoughts: Following gains in April, employment decreased by 42,000 in May, led by further manufacturing losses. The unemployment rate rose by 0.4 percentage points to 8.4%, the highest rate in 11 years. Since the employment peak of last October, employment has fallen by 363,000 or 2.1%.

Manufacturing employment continued on its downward trend with a decline of 58,000 in May, mostly in Ontario. This brings losses since October to 186,000 or 9.4%, with the largest decline in transportation equipment manufacturing. Ontario has experienced the brunt of overall manufacturing losses over this period. There was also a decline in transportation and warehousing (-16,000) in May, bringing total losses in that industry to 48,000 (-5.5%) since October. Public administration was the only industry with notable gains in May, up 19,000.

Self-employment fell by 32,000 in May, offsetting the gain in April. The number of private sector employees continued to decline, down 36,000 in May, while public sector employment was up 27,000, largely driven by the gains in public administration.

TheLFB-Forex.com Trade Team notes that the Canadian labor market is following the same route as the U.S. and the European labor markets. For now, the government hands are tied since there is little the authorities can do to reverse the rising unemployment trend. Additionally, this seems to be a global trend, rather than a local one.

Forex Technical Reaction: The cad rose 25 pips following the news release, re-testing the high of the session. Since the Friday session began, the cad has gained 65 pips, from which most came during the European session.

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