Canada Adds 58,200 Jobs in April, Unemployment Hits 7.3%
Canadian employment rose almost six times faster than economists forecast in April, led by private- sector and full-time positions, creating the largest two-month increase in more than 30 years and leading investors to raise bets on higher interest rates.
Employment rose by 58,200 following a March jump of 82,300 that was the biggest since September 2008, Statistics Canada said today in Ottawa. The labor force grew by 72,500, lifting the jobless rate to 7.3 percent from 7.2 percent. Economists surveyed by Bloomberg News projected a 10,000 gain in jobs and 7.3 percent unemployment, according to the median forecasts.
Canada’s recovery may prompt central bank Governor Mark Carney to raise borrowing costs this year, leading the Group of 10 nations, according to Toronto-Dominion Bank. (TD) The Bank of Canada said last month higher interest rates may be needed because of faster-than-expected growth, while a report yesterday showed a fifth straight trade surplus.
“It’s the strongest vote of confidence you can get,” said John Clinkard, economist at Deutsche Bank AG in Toronto, in a telephone interview. Companies are “catching up” after delaying hiring earlier in the recovery, he said.
Canada’s dollar appreciated 0.6 percent to 99.63 cents per U.S. dollar at 10:08 a.m. in Toronto. Earlier it weakened as much as 0.3 percent. Bonds fell, with the yield on the 2-year government benchmark rising nine basis points to 1.33 percent.
Investors increased bets the Bank of Canada will raise its key interest rate from 1 percent later this year after the jobs report. Trading in overnight index swaps show about a 42 percent chance the rate will be 1.25 percent after the bank’s Sept. 5 meeting, up from 36 percent yesterday. Today’s data also show about a 45 percent chance the rate will be unchanged in September.
Private companies added 85,800 workers in April while public-sector employment fell by 19,200, Statistics Canada said. Full-time employment increased 43,900 in April following March’s 70,000 rise. Part-time positions climbed by 14,300, Statistics Canada said.
The construction industry posted the largest increase with 24,600 new jobs. Manufacturing added 23,800 positions and education rose by 16,800.
Ikea Group said May 8 it has started expanding a Montreal furniture store to make it the biggest in North America.
Natural resources employment grew by 11,000 in April, leading all industries with a year-over-year increase of 12.5 percent, Statistics Canada said.
Quebec added 23,300 jobs to lead all provinces, the report shows, followed by 19,700 in British Columbia and 10,700 in Alberta. Ontario saw a loss of 7,700 in the month.
The 140,500 increase in employment in March and April was the largest two-month gain since January and February 1981, when 143,300 jobs were created, according to Statistics Canada.
The job surge follows a May 8 report that housing starts rose 14 percent last month to the highest since September 2007. Bank of Canada Governor Mark Carney has said he’s balancing signs of domestic strength against the risk that global risks such as Europe’s debt crisis will erode demand.
Canada’s gross domestic product unexpectedly shrank 0.2 percent in February on mining shutdowns and the first drop in manufacturing in six months, Statistics Canada said April 30.
‘Set the Stage’
“Today’s data combined with a robust housing starts report for April set the stage for stronger growth in the second quarter,” said Dawn Desjardins, assistant chief economist at Royal Bank of Canada in Toronto. “On the domestic front, activity indicators are sturdy enough for the Bank of Canada to lean to reducing monetary policy stimulus.” She predicts a fourth-quarter rate increase.
Average hourly earnings of permanent employees rose 2.4 percent in April from a year earlier, slower than the prior reading of 2.5 percent. Both figures exceed the 2 percent inflation target set by the Bank of Canada, which says the wage measure is a key indicator of inflation pressure.
Workers classified as employees by Statistics Canada rose by 66,600 while the self-employed decreased by 8,400 in April.
Public administration work fell by 32,400 positions in April, Statistics Canada said, and retailing and wholesaling jobs fell by 18,400.
Finance Minister Jim Flaherty’s March 29 budget showed plans for 19,200 federal government job cuts, or 4.8 percent of the total, to help eliminate a budget deficit. About 7,200 of those reductions will come through attrition.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org