Canada's May unemployment rate rises to 5.2pc

OTTAWA, June 9 (Reuters): Canada unexpectedly shed jobs in May and the unemployment rate rose for the first time in nine months, data showed on Friday, a first sign of employment softness after the central bank hiked rates this week, in part because of the tight labour market.

The economy shed a net 17,300 jobs in May, entirely in full-time work, while the jobless rate inched up to 5.2 per cent, Statistics Canada said.

Analysts surveyed by Reuters had forecast a net gain of 23,200 jobs and for the unemployment rate to edge up to 5.1 per cent in May after staying at 5.0 per cent since December.

A series of surprisingly strong economic data and stubbornly high inflation led the Bank of Canada to raise its overnight rate to a 22-year high of 4.75 per cent on Wednesday.

After the jobs figures, money markets continued to price in another interest rate hike, potentially as soon as July, and many analysts forecast another increase in July as the bank struggles to bring down inflation that remained more than double its 2.0 per cent target in April.

"Some cracks appeared within the Canadian labour market in May, but these may not yet be wide enough to convince the Bank of Canada that inflation is about to meaningfully cool off," said Andrew Grantham, senior economist, CIBC Capital Markets.