Canada’s job creation in January was more than four times the median forecast, pushing the Canadian dollar to its strongest level since May 2008 and adding to evidence the country’s economic recovery may be accelerating.
Employment rose by 69,200 and the labor force increased by 106,400, Statistics Canada said today in Ottawa. The jobless rate rose to 7.8 percent from December’s 7.6 percent, as more people sought work. Economists forecast 7.6 percent unemployment and job growth of 15,000, according to the median estimates of 25 and 26 economists surveyed by Bloomberg News.
“This adds confidence to the notion we are headed for a better year for growth and growth in the job market,” said Mark Chandler, head of Canadian currency and rates strategy at Royal Bank of Canada’s RBC Capital Markets unit in Toronto. “There isn’t a lot of slack in the labor market in Canada, certainly on a relative basis to other countries.”
Canadian policy makers have been dealing with the impact of a strong currency and a slowdown in growth of household and government spending that crimped the economic recovery in the second half of last year. Bank of Canada Governor Mark Carney stopped raising interest rates after September and Finance Minister Jim Flaherty scaled back plans to exit stimulus.
“It’s one of these reports that’s strong through and through - it’s hard to find any weakness,” said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit.
“The Bank of Canada would likely just see this as a step towards a stronger recovery, but not a point where they would need to respond,” he said. He predicts a July rate increase.
The report restores Canada’s status as having regained all the jobs lost in the recession, after a Jan. 28 revision based on updated census data reduced Statistics Canada’s estimate of total employment.
The Canadian dollar gained 0.4 percent to 98.75 cents per U.S. dollar at 4:30 p.m. in New York from 99.11 cents yesterday, after earlier touching 98.32 cents, the strongest level since May 2008. The benchmark 10-year Canadian government bond yield increased four basis points to 3.46 percent, the highest since May.
Full-time employment rose by 31,100 in January, and part-time jobs rose by 38,000, Statistics Canada said.
Private companies boosted their payrolls by 22,700 during the month and public-sector employment increased by 26,400, Statistics Canada said today.
Statistics Canada said in its Jan. 28 revisions that employment fell 2.5 percent, or 427,900, between October 2008 and July 2009, and increased by 398,000 jobs between July 2009 and December 2010.
The Bank of Canada said last month that there will be “slack” in the economy until the end of 2012 and companies need to boost investment and labor productivity.
“Too many Canadians are still looking for work, the economic recovery is fragile,” Flaherty said today in response to a question in the House of Commons. “We need to continue with our job-creating, low-tax plan.”
Prime Minister Stephen Harper has said reductions in corporate taxes are the best way to boost employment. Liberal Party Leader Michael Ignatieff has said he would cancel legislated tax cuts if he wins the next election and use some of the money for education and a program to support people who care for sick and elderly family members at home.
Flaherty said he will present his next budget in March and opposition parties have said they may vote against it, which would trigger an election.
Today’s report said that self-employment rose by 20,100 in January, while paid employment increased by 49,100.
Average hourly wages advanced 2.6 percent in January from a year earlier, the fastest pace since May, following a gain of 2.4 percent in December.
Employment for business, building and other support services rose by 33,700 in January. Public administration jobs gained 19,900, while health care and social assistance increased 15,200. Retail and wholesale employment rose by 8,300 in January.
Wal-Mart Stores Inc., the world’s largest retailer, said Jan. 26 it will open 40 “supercenters” in Canada by the end of January 2012, creating 9,200 construction and store jobs.
Transportation and warehousing jobs fell by 31,900 and accommodation and food services employment declined by 25,900, the report said.
The U.S. jobless rate unexpectedly fell in January to the lowest level since April 2009, while payrolls rose by 36,000 workers, the smallest gain in four months, the Labor Department said today in Washington.