Canada’s labour market added a net 26,700 jobs in May while the unemployment rate ticked up to 6.2 per cent, Statistics Canada said on Friday. With wage growth also edging back up, markets trimmed bets that the central bank will reduce interest rates again in July, although a cut is still on the table.

The increase in jobs was due to more part-time work. Full-time jobs declined 36,000 in May, while part-time employment jumped 62,000. Statistics Canada said in the involuntary part-time rate – meaning the proportion of workers who could not find full-time work due to poor business conditions – was up 18.2 per cent in May, up from 15.4 per cent last year.

The unemployment rate increased as job growth failed to keep up with Canada’s population surge. The job growth was broadly in line with analyst expectations. Economists surveyed by Reuters expected the economy to add 22,500 jobs in May. The increase in the unemployment rate matched forecasts. Wage growth – closely watched by the Bank of Canada – picked up in May, increasing 5.1. per cent compared to a 4.7 per cent increase in April.

Canada’s labour market adds 27K jobs in May, unemployment ticks up to 6.2%

“The 5.1 per cent year-over-year increase in average hourly earnings won’t sit well with the Bank of Canada,” Desjardins managing director and head of macro strategy Royce Mendes said in a research note on Friday. However, he noted that “officials appear to believe that much of the recent strength is due to wages catching up with consumer prices” and that wage growth should gradually settle back to a more sustainable range amid a deceleration in inflation.

On Thursday, Canada’s largest oil and gas producers faced Canadian lawmakers in a House of Commons committee hearing to defend the industry’s profits and spell out plans to reduce emissions.

“The rising unemployment rate is enough to keep the Bank of Canada on track to reduce rates again in July. That said, there is a significant number of data releases between now and then,” Mendes said.