07:47 AM EDT, 07/25/2024 (MT Newswires) -- Given the growing concern about the mounting slack in Canada's labor market and economy, Thursday's establishment survey of employment (SEPH) for May at 8:30 a.m. ET, even if outdated, takes on more importance, said Bank of Montreal (BMO).

A rebound is likely in May given the healthy 26,700 increase reported in the household survey, noted the bank. Still, the job vacancy rate could extend a downward slide that has returned it to pre-pandemic levels (at 3.2% of total employment), with companies pulling openings amid an uncertain outlook.

There's no doubt the demand for labor has weakened, and without slower population and labor force growth, the jobless rate will continue to march higher, stated BMO.

The Canadian dollar (CAD or loonie) is on the defensive Thursday, off another 0.2% to C$1.384 (US$0.722), after softening on dovish remarks by Bank of Canada (BoC) Governor Tiff Macklem on Wednesday, according to BMO. Returning inflation to the target isn't the BoC's only concern, with the risk of undershooting it also rising as the jobless rate heads north.

This means that either lower core inflation or a higher jobless rate will guide the timing of the next rate cut, with the market now leaning roughly 60% toward a three-peat in September, added the bank. The BoC is aiming to prop up a debt-laden consumer to try to absorb some of the disinflationary slack in the economy. A soft landing is no longer good enough; the economy needs to take flight again.