55.9k more Canadians were working in February on net. The unemployment rate remained at 5.8% as more of us were engaged with the labour market. The labour force participation rate rose 0.2p.p. to 65.8%.

The jobs mix was generally good, with full-time employment firmly in the driver’s seat (+67.4k). Part-time employment fell 11.6k. The private sector led the way, adding 31.8k net positions, while the public sector added 8.8k. Rounding things out was a 15.1k net increase in self-employment.

Younger Canadians again enjoyed the bulk of the gains, as 15-25 year olds saw a 28.6k net increase, which helped bring their unemployment down 0.4p.p. to 10.8%.

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The gain was largely due to the service sectors (+46.2k), with notable strength in professional services (+18.3k) and retail/wholesale trade (+12.1k).

For the third month in a row it was Ontario (+36.9k) and Quebec (+14.9k) that drove the overall gains, with little notable movement in the other provinces. Quebec’s unemployment rate ticked down to 5.3%, while Ontario’s was unchanged at 5.7%.

Wages accelerated again, rising 2.2% for permanent employees (January: + 1.8%). Despite the generally positive details of today’s report, aggregate hours worked fell for a third straight month, down 0.7% month-on-month.

The recent strength of labour market gains sent the trend (6mma) pace to 48.3k per month, the strongest it has been since 2002. The year/year pace of gains was a solid 2% in February.

Key Implications

Labour markets didn’t get the memo. The weak economic data that closed out 2018, and weak momentum heading into this year has not yet had any impact on labour markets. With the trend pace of hiring the strongest it’s been since the turn of the millennium and full-time jobs leading the way, there is a lot to like in today’s report, even allowing for the usual disclaimer about the monthly noise. Perhaps most encouraging was the second monthly acceleration of wages, which outpaced inflation for the first time in six months.

If wages were the concern through last year, hours worked may be the new candidate. Employment may be on a tear, but despite all the new jobs, Canadians are working fewer hours in aggregate. This is something to watch, particularly given the implications for economic output.

The Bank of Canada will be happy to see the generally healthy trend in labour markets continued in February, but today’s report probably bears even less influence on their thinking than usual. Reinforced by both the weak end to 2018 and Bank communication this week, seemingly solid job trends over the last year or so have not been translating into consumer spending. Until this disconnect is eliminated, and convincingly so, expect little from Governor Poloz and company.


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