Market News: Week Ending June 6, 2026

Market News: Week Ending June 6, 2026

Coming on the heels of last week’s announcement of a Canadian recession (GDP contraction in 2 consecutive quarters), Statistics Canada reported that labour productivity of Canadian businesses fell 2.0% (annualized) in the first quarter of 2026, as business output fell despite an increase in hours worked. This additional weakening follows a revised 1.2% decline (originally reported as 0.5%) in productivity in the fourth quarter of 2025. Over the past 6 years (24 quarters), productivity has declined in 13 of the quarterly observations. For comparison, between the end of 2014 and the first quarter of 2026, the U.S. has recorded a cumulative 23.2% advance in productivity. Meanwhile, Canada has now posted just a 4.1% gain over the same period. Rising productivity represents a clear competitive advantage as it allows an improving standard of living with both higher wages and faster economic growth, but without inflationary pressures. During the first quarter of 2026, Canadian unit labour costs rose 5.6% on an annualized basis and stand with a year over year gain of 3.2%. This is above both the pace of overall inflation (2.8% in April) and the Bank of Canada’s 2.5% CPI-common core inflation measure. This release is considerably weaker than the market consensus. 

The Institute for Supply Management announced that its Non-Manufacturing (Services) PMI moved higher to 54.5 in May, from April’s 53.6 level. The May reading is the 23rd consecutive above the key 50.0 (generally expanding) level for the services sector. With the market looking for a smaller gain, this report is stronger than consensus expectations. This result indicates signs of further expansion of the service sector. 

The U.S. Bureau of Labor Statistics announced that non-farm labour productivity expanded by a revised 0.3% (annualized – originally reported as +0.8%) during the first quarter of 2026, establishing another new high. This follows a 1.6% advance (on the same basis) in the final quarter of 2025. During the first quarter of 2026, unit labour costs rose 1.8% (annualized). These results are somewhat weaker than market expectations, but they paint a stark picture when compared to Canada’s extended decline in productivity. Productivity growth is a key competitive advantage. It is important for longer-term economic stability as it allows for a higher standard of living with higher wages and faster economic growth, all without added inflationary pressures. 

The U.S. Department of Labor announced that initial jobless claims totalled 225,000 (seasonally adjusted) in the week ending May 30, an increase of 13,000 

from the previous week's revised level. The previous week's level was revised down by 3,000 from 215,000 to 212,000. The 4-week moving average was 214,750, an increase of 6,500 from the previous week's revised average. The previous week's average was revised down by 750 from 209,000 to 208,250. These results are somewhat weaker than market estimates. 

The U.S. Bureau of Labor Statistics announced that non-farm labour productivity expanded by a revised 0.3% (annualized – originally reported as +0.8%) during the first quarter of 2026, establishing another new high. This follows a 1.6% advance (on the same basis) in the final quarter of 2025. During the first quarter of 2026, unit labour costs rose 1.8% (annualized). These results are somewhat weaker than market expectations, but they paint a stark picture when compared to Canada’s extended decline in productivity. Productivity growth is a key competitive advantage. It is important for longer-term economic stability as it allows for a higher standard of living with higher wages and faster economic growth, all without added inflationary pressures. 

The U.S. Department of Labor announced that initial jobless claims totalled 225,000 (seasonally adjusted) in the week ending May 30, an increase of 13,000 

from the previous week's revised level. The previous week's level was revised down by 3,000 from 215,000 to 212,000. The 4-week moving average was 214,750, an increase of 6,500 from the previous week's revised average. The previous week's average was revised down by 750 from 209,000 to 208,250. These results are somewhat weaker than market estimates

Statistics Canada announced that overall employment rose by 87,800 in May, partially reversing the cumulative 112,300jobs lost since the end of 2025. At the same time, the overall unemployment rate dropped from 6.9% to 6.6% in May, as the labour force reported a modest increase (3,800). The May results left the overall annual rate of job growth at a marginal 0.7%. Not surprisingly, public sector employment was up 1.5% (y/y) while private sector employment rose a far more modest 0.7% (y/y). Growth in entrepreneurs (self-employed) remained in negative territory -0.6% (y/y). Another increase in the population (14,400) left the participation rate (the percentage of working age individuals who were either working or looking for work) at 65.0%, far below the pre-pandemic peak of 67.3%. This indicates that as the population has surged, there are now 796,000 potential workers still on the sidelines compared to 95,000 at the end of 2010. A return to 67.3% participation would produce a more realistic unemployment rate of 9.7% - consistent with the ongoing recession. The headline results were stronger than market expectations but the still soft job market will again raise questions regarding the likelihood of a monetary policy adjustment by the Bank of Canada at their next interest rate announcement, scheduled for June 10.

The U.S. Bureau of Labor Statistics announced that the unemployment rate was unchanged to 4.3% in May. At the same time, gains in non-farm payrolls were reported as 172,000 during the month, adding to the revised 179,000 gain recorded for April (originally reported as 115,000). During May, average hourly earnings climbed 0.3% to stand with a year-over-year advance of 3.4%; below headline inflation (3.8% in April). This report was stronger than consensus estimates and will prompt further market debate on the future direction of Fed policy given the current ‘on hold’ position. The next meeting is scheduled for June 16 and 17. This is the most closely followed set of U.S. statistics as it indicates the relative health of the various sectors of the economy and is suggestive of consumer spending.

Note:
All index performance is in Canadian dollars.

IMPORTANT DISCLAIMERS
The information in this letter is derived from various sources, including CI Global Asset Management, CRA, Bloomberg, National Post, Globe and Mail, Wall Street Journal, Bloomberg, Reuters, Investment Executive, Advisor.ca, MarketWatch, Toronto Sun, The Guardian, MSN.ca and Statistics Canada at various dates. This material is provided for general information and is subject to change without notice. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.