Canada Job Creation Is Five Times Economist Forecasts as Economy Recovers
Canada’s job creation was almost five times more than economists expected in June, restoring most of the country’s job losses since 2008 and bolstering the case for the central bank to raise interest rates for a second month.
Employment rose by 93,200 in June, following gains of 24,700 in May and April’s record 108,700, Statistics Canada said today in Ottawa. The jobless rate fell to 7.9 percent, the lowest since January 2009, from 8.1 percent. Economists surveyed by Bloomberg predicted 20,000 new jobs and an unemployment rate of 8.1 percent, according to the median of 23 estimates.
The job market has been one of the strongest parts of a Canadian recovery the International Monetary Fund says will lead advanced economies this year. The Bank of Canada raised its key lending rate from a record low 0.25 percent June 1 after the economy grew at a 6.1 percent annualized pace in the first quarter. The bank said future moves depend on the balance of domestic growth and an uneven global recovery.
“You can’t really argue anything in this report,” said Benjamin Reitzes, an economist at BMO Capital Markets in Toronto. “Businesses are confident in our recovery and are hiring. That should get the ball rolling on growth from a private sector perspective.”
The Canadian dollar appreciated 0.9 percent to C$1.0324 per U.S. dollar at 11:37 a.m. in Toronto, from C$1.0420 yesterday. Earlier it reached C$1.0296, the strongest since June 23. One Canadian dollar purchases 96.85 U.S. cents.
‘More Normal Setting’
The odds of the Bank of Canada raising its interest rate to 0.75 percent at its July 20 decision rose to 96 percent today from 76 percent yesterday, according to a Credit Suisse Group AG calculation derived from overnight index swaps.
“The Bank of Canada has to move rates towards a more normal setting,” said Meny Grauman, a senior economist at Canadian Imperial Bank of Commerce in Toronto. He predicts a 1.25 percent benchmark rate at the end of the year.
“Our recovery is definitely more on track than most other countries, especially our neighbors to the south,” Grauman said. The U.S. Labor Department reported July 2 that private employers added fewer workers than economists predicted in June, and a jobless rate of 9.5 percent.
Retail and wholesale companies hired 21,600 workers in June, followed by 20,000 new jobs in business, building and other support services. Overall service-industry employment rose by 103,400, while goods-producing companies dropped 10,200 workers.
Full-time employment increased by 48,900 in June, Statistics Canada said, and part-time jobs by 44,200. Average hourly wage growth slowed to 1.7 percent in June from a year ago, compared with 2.4 percent in May.
Payroll employment rose by 67,600 in June, and self- employment rose by 25,600.
Canadian National Railway Co. plans to hire as many as 2,000 people annually over the next five years to replace retiring employees and reduce operating costs, Chief Executive Officer Claude Mongeau said in a July 7 interview in his Montreal office. Canadian National, the country’s largest railroad, had 21,501 employees as of Dec. 31.
Canada has added 403,000 jobs since July 2009, recouping almost all of the jobs lost in a slump that began in the second half of 2008, Statistics Canada said.
Employment rose by 1.4 percent or 226,600 jobs in the second quarter, Statistics Canada said. It was the greatest increase in employment in records dating to 1976, and the largest jump in percentage terms since 1983.
Ontario, the country’s most important province for manufacturing, led the June job gain with 60,300 new positions. Canadian factory employment fell by 14,300, and has dropped by 11.9 percent since October 2008.
“We have got the work” to boost payrolls, she said in a telephone interview today from the company’s headquarters in Guelph. About C$2 billion ($1.94 billion) of business is “under launch” over the next few years, she said.
“Because we have this very significant book of business that we are launching, even if there is another dip down in production, the new work that we have coming online should really help to offset that.”