Surprise leap in Canada's job growth dials down talk of more rate cuts
Canada's employment market is continuing down a rocky road, but at least it's consistently rocky.
The economy gained 28,700 jobs in March, when little hiring, if any, had been expected and coming after a loss of 1,000 positions the previous month.
When all tallied, that works out to unemployment rate of 6.8 per cent — the same level as February.
But most of the new jobs in March were part-time, up by 56,800 positions, while full-time employment fell 28,200. It was the other way around in February, when full-time positions accounted for the bulk of hiring, at 34,000, while part-time work was down 34,900.
“The employment numbers are consistent with an economy still scratching out some modest growth,” said Douglas Porter, chief economist at BMO Capital Markets.
“It also quite rapidly dialed down the talk of further rate cuts from the Bank of Canada. We certainly can’t put that to bed by any means, and certainly not based on one jobs report. But this figure just didn’t advance the cause one iota for rate cuts.”
Hiring in March was dominated by the public sector, which added 26,500 positions, while there were 19,300 more private-sector employees on the job during the month. Self-employment fell by about 17,000.
By sector, the service providers bolstered their payrolls by 45,300, in contrast to a loss of 16,500 jobs at goods-producing companies.
Manufacturing shed 2,400 workers in March, but at slower pace than the 19,900 drop a month earlier. The number of construction workers also fell, down 12,000 after a 15,000 increase in February.
“Even despite anticipated weakening in energy-sector employment and the hit to retail payrolls, we expect that the non-energy parts of the economy that benefit from lower energy costs and increased export demand from the U.S. will be able to keep the economy on a positive growth path,” said Dawn Desjardins, assistant chief economist at RBC Economics.
“Our expectation is that as the positive offsets continue, this will convince the Bank of Canada that it does not need to implement any more rate cuts to act as insurance against a significant downturn in the economy.”
In January, the Bank of Canada unexpectedly cut its trendsetting interest rate to 0.75 per cent from one per cent, a level untouched since September 2010.
Bank governor Stephen Poloz referred to that rate cut as “insurance” against the economic impact of the price plunge in crude oil, which is Canada’s single-largest export product. The central bank’s next rate decision will be on Wednesday.
Finance Minister Joe Oliver met this week with private-sector economists ahead of his April 21 budget, which will be later than the spending document’s usual release date.
Oliver said the consensus for this year’s economic growth is now about two per cent. That’s down from the previous consensus of 2.6 per cent.
Date: Apr 10, 2015