May 6 (Bloomberg) -- Canada added almost three times more jobs than economists forecast in April and the unemployment rate declined, suggesting the central bank will raise interest rates in the next few months.
Employment rose by 58,300 after a March decline of 1,500, Statistics Canada said today in Ottawa. The jobless rate fell to 7.6 percent from 7.7 percent, as the labor force grew by 47,400. Economists forecast no change in unemployment and 20,000 new jobs in Bloomberg News surveys that had 24 and 25 estimates. The largest estimate was for 40,000 new jobs.
Prime Minister Stephen Harper won a majority government May 2 after campaigning on his Conservative government’s record of helping Canada restore output and employment following the global recession. The Canadian dollar and bond yields rose after the report suggested the central bank will raise borrowing costs.
“Those people who have a new job are going to spend and that’s going to support spending going forward,” said John Clinkard, chief economist at Deutsche Bank Canada in Toronto, who is “very comfortable” forecasting a July rate increase by the Bank of Canada. “Things are moving a little more quickly than they anticipated.”
The Canadian dollar appreciated 0.8 percent to 95.94 cents per U.S. dollar at 9:35 a.m. in Toronto, from 96.69 cents yesterday. The Canadian currency touched 94.46 cents on April 29, the strongest since November 2007.
Bond Yields Rise
Government of Canada bond yields rose in maturities from one-year to 30-years today. The two-year bond led the gains, rising 8 basis points to 1.73 percent. The yield on the September bankers’ acceptance contract, which is tied to forecasts for the Bank of Canada’s overnight rate, rose seven basis points to 1.58 percent.
Service industry employment rose by 69,600 in April while goods-producing jobs fell by 11,300, Statistics Canada said today. Part-time work expanded by 41,100 and full-time jobs by 17,200.
“While one can quibble with the underlying quality of the hiring, given that it was led by part time workers, the overall picture is one of an economy moving gradually back to full employment,” Avery Shenfeld, chief economist at CIBC World Markets in Toronto, wrote in a note to clients. He predicts the Bank of Canada will raise its 1 percent benchmark interest rate in July.
Growth to Slow
The Bank of Canada said last month economic growth is likely to slow to a 2 percent annual pace in the April-June period after a surge in the first quarter. The bank has also said there is “considerable monetary stimulus in place.” The next meetings are May 31 and July 19.
Finance, insurance, real estate and leasing rose by 18,700 in April, followed by 17,200 jobs in business, building and other support services. Accommodation and food services employment rose by 3,800.
McDonald’s Corp. said April 19 it would hire as many as 4,000 workers that day for its Canadian restaurants.
Today’s report also showed that private companies boosted their payrolls by 35,600 and public-sector employment rose by 20,600 in April. Self-employment rose by 2,100, while paid employment increased by 56,300.
The U.S. Labor Department in Washington reported today that employment rose by 244,000 in April, the most since May 2010. The U.S. jobless rate increased to 9 percent from 8.8 percent, the first increase since November.
Most of Canada’s employment gains in April were concentrated in Ontario, the country’s most populous province, and Newfoundland, one of the smallest.
Newfoundland added 3,100 jobs in a province with a working-age population of 429,100, reducing the unemployment rate to 11.1 percent from 12.4 percent, the lowest since comparable records began in 1976.
“Firm crude oil prices and steady production levels are contributing to this impressive performance,” said Sonya Gulati, an economist at Toronto-Dominion Bank.
The province’s jobless rate has fallen 3.8 percentage points since July. The provincial government reported a C$59 million surplus for the fiscal year that ended March 31 as higher oil prices led royalty gains. Newfoundland had earlier forecast there would be a C$194 million deficit.
Ontario added 54,800 jobs in April, Statistics Canada said, and unemployment declined to 7.9 percent from 8.1 percent.
Canadian unemployment won’t decline much further this year, a separate Bloomberg economist survey shows. The jobless rate will average 7.4 percent in the last three months of the year, according to the median of 17 responses.
Average hourly wages advanced 2.5 percent in April from a year earlier, after a 2.7 percent gain in March.
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com