The Canadian economy shed 7.2k net jobs in March, ending a six-month streak of net gains. The unemployment rate held steady at 5.8% as slightly fewer Canadians engaged with labour markets.
Given the small change, the breakdown has less meaning than normal, but the drop was largely in full-time employment (-6.4k), and in the private sector (-17.3k). Public sector employment (+4.2k) and self-employment (+6.0k) held up in March.
On an industry basis, it was a mixed bag. The goods-producing sectors (+1.6k in aggregate) were roughly unchanged. Conversely, modest declines in some service sectors, notably health care (-20.0k), business support services (-14.3k) were offset by small gains in other categories, leaving the sector as a whole down 8.8k net positions.
The net drop in employment was largely a Quebec (-12.9k) and Ontario (-8.8k) story. B.C. provided some offset (+7.9k), with the remaining provinces even closer to no-change readings.
On the wage front we saw a slight uptick, to 2.3% year-on-year for permanent employees (February: +2.2%). Total hours worked rose 1.0% month-on-month, the strongest gain in more than a year, but not enough to offset the prior three months’ declines.
Looking beyond the monthly noise, the six month trend remained solid at 35.5k per month. Employment was up 1.8% year-on-year in March.
Key Implications
Yawn. The story of the March jobs report was one of statistical zeros pretty much across the board. The end of a six month streak of job gains is sure to catch headlines, but given the strength we’ve seen over the past half year, a flat report isn’t really surprising and indeed makes some sense given the relatively modest performance of other economic indicators in recent months.
If there is a bigger area to watch, it is hours worked. The 1% monthly climb in March is encouraging, but came after weather-induced softness in February, and was insufficient to reverse the prior three months of declines. This is despite adding a net 123.3k jobs over this time, with more than half in full-time work.
For the Bank of Canada, the key area of today’s report is likely wages, where growth was effectively unchanged at 2.3% y/y. This is pretty close to the historic average, suggesting they have little to worry about from an inflation perspective (and at the same time, hardly indicative of tight labour markets). This again suggests that the current setting of the policy rate may be just about right, underscoring our view that the Bank of Canada may be on hold for quite some time to come.
