The Canadian labor market was stronger than expected in April, as employment soared 90,400 on the month, more than five times as much as expected by forecasters in an Econoday survey, and the largest gain since January 2023. However, the unemployment rate remained unchanged at 6.1 percent, with the participation rate edging up to 65.4 percent from 65.3 percent.

The strong job creation momentum didn't translate into higher wage growth pressure. Quite the opposite: average hourly wages among employees increased 4.7 percent year-over-year (unadjusted), down from 5.1 percent in March. In addition, Econoday's Relative Performance Index remains within a zone consistent with building easing risk. Still, even though it is volatile, the headline number might be strong enough to take a June rate cut off the table as the central bank continues to focus on the balance of supply and demand in the economy and what it means for core inflation.

After a small retreat in March, both full-time and part-time employment rebounded in April, by 40,100 and 50,300, respectively.

The number of employees grew 75,900, led by a 50,400 advance in the private sector. Employment in the public sector was up 25,500. Self-employment rose 14,500.

Looking at the industry breakdown, gains were concentrated in services, which added 100,700 jobs, while goods-producing industries shed 10,400 positions.

Within services, most sectors added positions, led by professional, scientific and technical services with 25,500 jobs, accommodation and food with 24,200 jobs and health care and social assistance with 17,400 jobs, together creating 67,100 positions.

Within goods-producing industries, construction shed 11,100 positions, agriculture 5,400, and utilities 5,000. Manufacturing created 3,400 jobs and natural resources 7,700.

Employment in April is expected to rise 16,300 versus March's unexpected 2,200 decline that, however, followed solid gains of 40,700 and 37.300 in the two prior months. April's unemployment rate is expected to edge higher to 6.2 percent from March's 6.1 percent which was 2 tenths higher than Econoday's consensus.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.