• This note is part of a series that will be published after important data releases, documenting mechanical updates of the nowcast for Canadian GDP coming from the Scotiabank nowcasting model. The evolution of this nowcast will inform Scotiabank Economics’ official macroeconomic outlook. 

The model is described in a related note here

  • The Canadian economy gave rise to thousands of net new jobs in May, although some parts of the labour market underperformed. Even as the number of employed Canadians grew by a net +40Kin May (+0.2% m/m), predominantly in full-time positions, and the unemployment rate ticked down by 0.1ppts to 5.1%, the hours worked economy-wide declined by -0.3% m/m. The latter failed to recover following an even larger fall of -1.9% m/m in April. On balance, the weakness in hours worked despite a relatively healthy growth in employment so far in Q2-2022 points to slightly lower overall GDP growth, leaving the nowcast at +3.76% Q/Q SAAR.
  • On the employment side the picture was relatively healthy in May, with a gain of +135K net new full-time positions partly offset by a decline of -96K in part-time. The service sector was the main driver of the employment gains in May (+81K net new jobs added), mostly in wholesale and retail trade (+38K), education (+24K) and accommodation and food services (+20K). Firms in these industries benefited from the continuing recovery in consumer spending on high-contact services, as well as from higher in-person retail shopping which grew at the expense of e-commerce (see here).
  • The weakness in jobs was concentrated in the goods industries, in particular manufacturing (-43K). There is a long list of factors weighing down growth in the manufacturing sector in the short to medium term, from the continuing shortages of input parts and broader supply chain disruptions, to high commodity prices, to the rotation of demand towards service spending by consumers.
  • As the employment continued to rise and the unemployment rate fell to a new record low of 5.1% in May, the tightness in the labour market continued to push up average wages (+3.9% y/y), although this rate of increase is far outpaced by the rise in consumer prices (total CPI: +6.8% y/y in April).
  • Overall, the mixed signals that the labour market is sending are not surprising given the strong global turbulence buffeting the world economy, and such volatility should be expected for the foreseeable future. Despite this, the Canadian economy continues to perform well, and a few disappointing indicators—be it hours worked or stumbling merchandise exports—should be seen in the context of the continuing strength in the Canadian domestic demand.




This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.

These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.

Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.

Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.

This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.

™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.

Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.

Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.

Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.