Canada’s jobless rate fell more than economists predicted in January as employers added full-time workers and service industries gained.
Unemployment fell to 7.0 percent in January from December’s 7.2 percent as the number of jobs rose by 29,400, partly reversing the prior month’s drop of 44,000, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News projected the jobless rate would decline to 7.1 percent with a 20,000 payrolls increase, according to median forecasts.
The hiring may bolster consumer spending that has driven economic growth since the 2008 financial crisis while exports and business investment have faltered. The Bank of Canada has kept its policy interest rate at 1 percent for more than three years and predicts the economy won’t reach full output for another two years, a policy stance that pushed the Canadian dollar to four-year lows.
The report “is suggesting there’s not bad momentum in the economy, sufficient to keep pushing the unemployment rate down and that should push inflation higher,” Paul Ferley, assistant chief economist at Royal Bank of Canada, said by telephone from Toronto. “It’s not the kind of environment where the Bank of Canada needs to cut rates.”
Canada’s dollar strengthened after the report, rising 0.6 percent to C$1.1005 at 8:52 a.m. in Toronto.
U.S. payrolls rose by 113,000 in January, less than the 180,000 advance economists projected. The unemployment rate unexpectedly declined to 6.6 percent in a report from the Labor Department today in Washington.
Statistics Canada said full-time employment rose by 50,500 in January and part-time positions declined by 21,100. Employment in services rose by 25,800 and goods-producing companies added 3,600 workers.
Accommodation and food service companies led hiring gains in January with 17,000 new workers, followed by health care and social assistance with 16,900.
Home Depot Inc. said Feb. 5 it plans to hire 6,300 people to boost staff at its 180 Canadian stores in the next few months.
Public-sector employment rose by 14,700 in January while private companies cut 13,600 positions.
Wages accelerated along with employment in January. Average hourly wages of permanent employees rose 2.7 percent from a year earlier, exceeding the prior reading of 2 percent.
One sign of weakness in Canada’s labor market is the participation rate, which fell to 66.3 percent in January, the lowest since February 2002. Some 20,900 people left the labor force last month, helping to push down the jobless rate.
Finance Minister Jim Flaherty has said his budget on Feb. 11 will seek ways of sustaining job growth without big spending programs as he seeks to eliminate Canada’s deficit in the fiscal year starting April 2015. Flaherty could abandon his deficit plan if economic growth remains sluggish, the International Monetary Fund said this week.