Canada posts massive job gain, jobless rate nears 3-year low

Ottawa, March 12 (BNA): Canada posted massive job gains in February, easily beating expectations and more than erasing January’s slump, while the unemployment rate fell below its pre-pandemic level for the first time, according to data from Statistics Canada. on Friday.

The economy added a net 336,600 jobs, more than double the 160,000 analyst expectations, Statscan said. The unemployment rate fell to 5.5%, its lowest level since 5.4% in May 2019, as Canada reopened from strict Omicron restrictions, Reuters reported.

Hours worked increased 3.6%, exceeding February 2020 levels for the first time, with average hourly wages for permanent employees rising 3.3%. Overall, employment is now 1.9% higher than pre-pandemic levels.

“We were expecting strength, but not quite as much,” said Jamie Jane, chief economist at Desjardins group.

“Canada has a history of a very resilient labor market coming out of these (COVID-19) waves…You have a lot of jobs and that will allow consumers the ability to absorb the impact of higher inflation, especially as wages accelerate.”

The huge gains come as the Bank of Canada is widely expected to press ahead with a second rate hike at its next meeting in April. Money market data showed that the chances of a 50 basis point rise rose to 45% from 37% before the report.

Central Bank Governor Teff McClem said last week that the central bank had “a lot of room” left to raise interest rates and did not rule out a 50 basis point move if needed to curb rising consumer prices. Inflation hit a 30-year high in January at 5.1 percent.

Doug Porter, chief economist at BMO Capital Markets, said that while labor market strength boosts the chance of a sharper rally ahead, that is unlikely in April, with a lot of uncertainty hampering expectations.

“I think they will need to see a little more clarity about the situation in Ukraine, and global financial markets in general, before they take a bold step,” he said.

“Let’s just say their finger will be on the 50 basis points trigger now when conditions allow.”

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