04:26 PM EDT, 06/06/2025 (MT Newswires) -- The Toronto Stock Exchange closed higher on Friday, and eked out the third record close of the week as market watchers differed in their readings of Canada's May job numbers released today and year to date, and how they might influence the Bank of Canada's rate policy.

The S&P/TSX Composite Index ended the session up 86.84 points to 26,429.13, single digits ahead of the prior record close of 26,426,64 hit on June 3.

Most sectors were higher, with the Battery Metals Index, up 2.5%, Info Tech, up 1.9% and Energy, up 1.4%, leading the way. Telecoms and Utilities were both down less than 0.5%.

On Canada's labor force survey, Robert Embree, Senior Economist and geopolitical risk analyst at Rosenberg Research, noted it beat expectations in May. But, he said, when you add up the five months so far this year, "the overall picture is not good".

Canada's May employment data showed a rise of 8,800 jobs, beating the consensus estimate for a drop of 10,000 positions. But given the "massive volatility, month to month", Embree would advise people not to focus too much on the consensus beat and look, instead, at the trendline.

Embree noted the unemployment rate rose to 7.0%, matching the consensus estimate. That's now the highest since September 2021, around 1.3 percentage points above a "neutral" rate of unemployment, and is a "sign of massive and still growing slack in the labor market". Embree said all of this means that in 2025 so far, total employment is up just 60,700 positions, the slowest five-month pace since May 2021. The two-year run-up in the unemployment rate is now 1.8 percentage points, the same as April and up from 1.7 ppts in March, and is "a clear recession indicator", he added.

Douglas Porter, Chief Economist at BMO Capital Markets, in his regular 'Talking Points' column said Canada's jobs data also "flashed signs of trade stress", with manufacturing payrolls declining another 12,000 in May. That's the fourth consecutive drop, bringing cumulative losses to 55,000 or almost 3% of all factory jobs. Porter noted transportation and warehousing also sustained job losses as U.S. tariffs bite, while other sectors managed to partially offset trade related damage, and employment outside of election related workers rose about 40,000 in May. However, Porter said, the "steady and sustained" rise in the unemployment rate to 7.0% last month is probably the clearest indication that the economy isn't keeping up with "still solid" population growth. He noted the 2.8 percentage point gap between Canada's jobless rate and the U.S. rate is the widest since early 2001, aside from the wild distortion in March 2020.

"The conclusion," Porter said, "is that while the Bank of Canada stayed on the sidelines again this week, we believe that as long as the trade uncertainty persists, it's only a matter of time before it is cutting again. Labour market slack is building, trade and manufacturing are now facing reality after a pre-tariff burst, and housing activity remained subdued in the major Canadian cities in all-important May. The Bank wants more time to ensure that inflation remains "contained" before resuming rate cuts, and we suspect that evidence will emerge before too long. While this week's seeming thaw in some bilateral relations is mildly encouraging, the reality on the ground is a still-raging trade war, highlighted by the U.S. doubling of steel and aluminum tariffs to 50%. Talk is cheap, but a trade fight is very costly."

But elsewhere Derek Holt, Head of Capital Markets Economics at Scotiabank, said unlike the "distorted" readings over January to April that were "artificially depressed by cooked seasonal adjustment factors", that "wasn't the case this time". Holt cited a chart he said shows the seasonally adjusted factor "wasn't a deep outlier this time, as May typically is not". He added: "Alternative scenarios for job growth at other SA factors would have still mostly generated decent job growth."

Holt noted the unemployment rate ticked up to 7% because the labour force expanded by 35,000 last month and that exceeded aggregate job growth. He also noted the rise in the unemployment rate since 2022 has been mostly focused upon excessive numbers of temps.

"I think the Bank of Canada will fade these numbers. Not because they're bad; they're actually quite good. But because their reaction function has signaled a stronger focus upon the next two CPI reports notwithstanding how contradictory its guidance is right now."

Of commodities, West Texas Intermediate crude oil closed higher on Friday, on some economic optimism after the United States added more jobs than expected last month, while the Trump Administration will stage trade talks with China next week. WTI oil for July delivery closed up $1.21 to settle at US$64.58 per barrel, while August Brent crude was last seen $0.99 to US$66.33.

But gold traded lower mid-afternoon Friday as the dollar and yields turned sharply higher. Gold for August delivery was last seen down $30.80 to US$3,344.30 per ounce.