(Reuters) — Canada's unemployment rate fell to 7.4 per cent in May from 7.6 per cent as 22,300 jobs were added, marked by a solid shift toward full-time, private sector employment, according to Statistics Canada.
The employment gain, which helped strengthen the Canadian dollar, slightly exceeded the 20,000 jobs expected by analysts though it was down from April's 58,300 gain.
Analysts had forecast the jobless rate staying at 7.6 per cent. By contrast, data earlier this month from the United States showed the unemployment rate there rose to 9.1 per cent from nine per cent in May.
Besides the employment gain, another reason for the drop in Canada's rate was fewer people were looking for work.
"The jobs numbers were reasonably comforting news amidst other data that showed the second quarter is going to be a disappointment," said Avery Shenfeld, chief economist at CIBC World Markets.
"The only fly in the ointment was that the job gains were associated with self-employment, which can sometimes involve a smaller output gain associated with them."
The number of self-employed rose by 29,500, said Statistics Canada. Full-time employment grew by 32,900, while part-time fell by 10,600. Private sector employees rose by 37,100 and public sector jobs fell by 44,300.
The job gains were led by the services sector, which went up by 37,200, especially in wholesale and retail trade.
The better-paying goods-producing sector fell by 14,900. Manufacturing, which was hit by supply-chain disruptions from the Japanese earthquake, lost 22,500 positions though it was still up 25,000 over a year earlier.
The construction industry, expected to be affected by a winding down of the government's stimulus package, was slightly up.
The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressure, rose 2.2 per cent from one year earlier, compared with 2.4 per cent in April.
"That means Canadians are not keeping up with inflation, such that real wages are flat to slightly lower. So, despite the headline on jobs, that still remains a generally bearish indicator for near-term consumption," said Scotia Capital economist Derek Holt.