Employment Surge in March Takes Canadian Rate Cut Off Tableby
Country adds 40,600 jobs; unemployment rate falls to 7.1%
Gains include 18,900 new positions in struggling Alberta
Canadian employment rose faster than forecast in March on full-time work and a revival in oil-producing Alberta, a big step in erasing the chance the central bank will cut interest rates.
Employment increased by 40,600 after falling 2,300 in February, Statistics Canada said Friday in Ottawa. The jobless rate declined to 7.1 percent from 7.3 percent, the highest since March 2013. The job gain exceeded all 21 economist forecasts in a Bloomberg News survey with a median estimate of 10,000 new posts; the survey also predicted no change in unemployment.
The job gain is another sign of stability before the Bank of Canada’s April 13 interest-rate decision, following heavy damage from low crude oil prices last year. Governor Stephen Poloz said in January he may rely on fiscal stimulus and gains in non-energy exports to return the economy to full output. Since then, Prime Minister Justin Trudeau delivered a plan for years of deficit spending while manufacturing helped gross domestic product grow in January by the most since 2013.
“The strength we have seen early in 2016 is going to argue against the need to cut interest rates,” Paul Ferley, assistant chief economist at Royal Bank of Canada, said by phone from Toronto.
Canada’s dollar strengthened 1.2 percent after the report to C$1.2985 per U.S. dollar at 10:21 a.m. Toronto time. The currency remains 3.5 percent weaker than 12 months ago.
Other data suggests the economy grew about 3 percent in the first quarter, mostly on exports of durable items such as automobiles and parts. Still, the central bank said as recently as last week the adjustment from lower oil prices may take longer than two years.
Full-time employment rose by 35,300 in March, while part-time work rose by 5,300, Statistics Canada said. Services employment rose by the most in four years with a gain of 74,700 people, including a 24,900 rise in health care and social assistance.
One of the biggest surprises in the report is 18,900 new jobs in Alberta, the nation’s energy hub that has been hobbled by low crude oil prices. The western province’s unemployment rate dropped to 7.1 percent from 7.9 percent, which was the highest since 1995.
Alberta job gains were concentrated in retail and wholesale trade and not the province’s staple oil and gas industries, Statistics Canada said.
“Workers who have lost their jobs in higher-paying areas are now basically taking what they can get,” said Doug Porter, chief economist at BMO Capital Markets in Toronto.
Those kinds of jobs are still important in halting a rise in a jobless rate that had climbed from 6.6 percent at the start of last year, Porter said. “The fever broke on the unemployment rate, I think that is a pretty important development.”
Private companies added 65,100 workers and public-sector employment declined by 2,600. Workers designated by Statistics Canada as employees rose by 62,600 and the self-employed category decreased by 22,000.
One spot of weakness was the 31,800 decline in manufacturing employment, the biggest since 2009. The central bank has been seeking gains in exports outside the energy industry to revive the economy’s momentum.
“Today’s employment report is supportive of the Bank of Canada’s view to wait-and-see how conditions develop before altering the course of policy,” Bricklin Dwyer, an economist at BNP Paribas in New York, wrote in a research note.