Canada's jobs engine slows its growth in Feb, but wages reaccelerate
The Bank of Canada says it expects the labour market to weaken in the coming quarters
Canada’s labour market held steady in February with employers adding 22,000 jobs, Statistics Canada reported Friday, showing continued resilience despite the Bank of Canada’s efforts to engineer a slowdown.
Consensus expectations from economists surveyed by Bloomberg was for an increase of 10,000 jobs.
“What went up has yet to come down in the case of Canadian employment,” Royce Mendes, managing director and head of macro strategy at Desjardins, said in a client note.
“The data shouldn’t come as a complete surprise given that large increases in the Labour Force Survey are typically followed by at least one more month of solid hiring.”
The Feb. headline number comes after a cumulative 219,000 positions were added in the previous two months.
The Bank of Canada will continue to stress that it may still need to raise interest rates furtherStephen Brown, Capital Economics
The growth was driven by full-time work, and the health care, public administration and utilities sectors saw the biggest gains.
The unemployment rate remained unchanged at 5.0 per cent, near the record low reached last summer.
Wages jump after two months of easing
Average wage growth reaccelerated to 5.4 per cent year-over-year, after spending two months below the five per cent mark.
The increase in wages adds to evidence “that the labour market is not following the Bank of Canada’s plan for the economy,” Mendes said.
The labour market has been resilient to the Bank of Canada’s ratcheting up of interest rates, and one of the main reasons it has left the door open to more rate hikes if necessary.
“With the low unemployment rate putting upward pressure on wage growth, the Bank of Canada will continue to stress that it may still need to raise interest rates further,” Stephen Brown, deputy chief North America economist at Capital Economics, said in a note.
The central bank paused its tightening campaign this week to assess the impact of higher borrowing costs, saying it expects the job market to weaken in the coming months.
“With weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease,” Bank of Canada governor Tiff Macklem said in a written release of its latest interest rate decision Wednesday.
“This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers.”
Despite the February report though, not all economists are convinced another rate hike is on the horizon in Canada.
“The still historically low unemployment rate and strong wage growth will keep the Bank of Canada leaving the door open to future rate hikes, although we still don't think the data will be strong enough for policymakers to actually walk through that door,” Andrew Grantham, senior economist at CIBC Capital Markets, says.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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