Canadian labour market is off to its best start since 1981
Canada’s economy posted its second-straight surprise job surge, making the labor market a lone bright spot for an economy in the middle of a sharp slowdown.
Employment increased by 55,900 in February, all full-time jobs, Statistics Canada said Friday in Ottawa, building on a 66,800 gain in January. The two-month gain is the best start to a year since 1981. Canada’s economy has added 290,000 jobs since August, the largest six-month increase since the early 2000s. The Canadian dollar jumped on the news.
The much-stronger-than-expected labor market is the only thing giving policy makers comfort amid a run of bleak data in recent months. It’s a key reason why the Bank of Canada is sticking to its belief the economy will rebound and interest rates will likely head higher.
The employment gains in recent months come amid an otherwise dismal performance for the economy recently, amid stresses in the oil sector, weakening housing markets, volatility in global financial markets and waning consumer and business confidence. Economists were forecasting a gain of just 1,200 in February.
“Is the Canadian economy a dead parrot, or like the one in the Monty Python skit,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors. “Maybe it’s just resting, since today’s jobs data seem to suggest that there’s a lot of life left in it.”
Last week, Canada’s statistics agency reported the nation’s economy grew by just 0.1 per cent in the final three months of 2018. Most economists expect the sluggishness to persist in the first six months of this year, before growth picks up steam later in 2019.
The jobs increase largely reflects higher labor force numbers, rather than falling unemployment, due to rising participation rates and accelerating population growth over the past couple of years. Much of the increase in Canada’s population comes from international working-age migrants. In an economy with more than half a million vacant jobs, many seem to be finding work.
Canada’s employment gains were even stronger than those south of the border. The U.S. Labor Department on Friday reported a 20,000 increase in nonfarm payrolls for February. The Canadian dollar jumped on the news, gaining 0.4 per cent to C$1.34012 per U.S. dollar at 8:36 a.m.
The labour force increased by 55,100 in February, and is up by 159,000 so far this year. Canada’s jobless rate was unchanged at 5.8 percent, even with the employment gains, because more people were looking for work.
The breakdown in the numbers was also positive, with 67,400 new full-time jobs offsetting a loss of 11,600 part-time positions.
Even the wage picture is looking better. Annual average hourly gains accelerated to 2.3 percent in February from 2 per cent a month earlier, with pay for permanent employees up 2.2 per cent, from 1.8 per cent previously.
One weakness was total hours worked, which fell 0.1 per cent in February from a year earlier.