Despite all the negative news around the economy, and signs of slowing growth, Canada’s job numbers soared for the second month straight, adding credence to our belief that we aren’t headed for a recession in the immediate future.
Statistics Canada today said that employment grew for a second consecutive month, up 56,000 in February, driven by gains in full-time work, while the unemployment rate was unchanged at 5.8%. In January, the economy added 66,800 jobs. This is the best start to a year since 1981.
“Somebody forgot to tell the Canadian job market that a slowdown is going on”, said BMO Financial Group’s chief economist Douglas Porter pointing out in a note that with the labour force jumping by 380,000 over the past year, this means it takes monthly job gains of nearly 32,000 to keep unemployment from rising --- so the bar for this report has risen accordingly. Even with a 2% jump in employment in the past year, the unemployment rate is precisely unchanged from a year ago, he said.
RBC Economist Rannella Billy-Ochieng meanwhile warned that the employment growth was unbelievably strong in February, and said that the labour force data is highly volatile. “It is hard to believe that there won’t be an offsetting pullback in the monthly jobs count at some point — particularly given the slowing in economic growth over the winter. And wage growth still looks puzzlingly weak given low unemployment, even with a tick higher in February,” Billy-Ochieng said.
Ontario accounted for most of the gains, adding 37,000 jobs in January. The unemployment rate for the province was unchanged at 5.7% as more people participated in the labour market. Quebec, Alberta and B.C. also gained. However, in Manitoba, employment declined by 3,300 in February.
“One province to note is Nova Scotia, where a 2.4k rise in jobs was enough to slash the jobless rate 5 ticks to just 6.4%, an all-time low,” Porter said.
“Is the Canadian economy a dead parrot, or like the one in the Monty Python skit, maybe its just resting, since today's jobs data seem to suggest that there's a lot of life left in it”, said Avery Shenfeld, Chief economist at CIBC in a note, pointing out that hourly wage inflation is still relatively moderate, but this month did have all of the gains show up in full time work, and was led by fairly broad based gains in private sector hiring.
“While there's nothing in this that spells a rate hike any time soon, the market might rethink the idea that the next move is sure to be a cut. As a result, front end yields will be a bit higher and the Canadian dollar firmer, with the yield impact cushioned by a weak payrolls report in the U.S. today,” Shenfeld said.
The U.S. economy added a much lower-than-expected 20,000 non-farm payrolls in February.
However, not all the Canadian news was positive. “The one sour note in the release was sounded by total hours worked, which fell 0.7% month on month and is headed for nearly a 2% annualized drop in Q1, which fits with our call of no GDP growth in the quarter,” Porter said, adding that the reported sag in overall hours worked are a pretty clear indication that growth did indeed stumble around the turn of the year, and takes some of the shiny gloss off this release.
“Overall, the message for the Bank of Canada from recent economic data is that staying on the sidelines is the place to be,” he said.
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