The Canadian labour market gained 73k positions in March, with full-time employment up 93k.
The unemployment rate dropped by 0.2 percentage points, to 5.3% (a record low!). The participation rate was little changed at 65.4%.
By industry, services-producing employment rose 42k, with food services leading the way, up 15k. Meanwhile, employment increased in the goods-producing sector (31k), with the construction industry (14k) once again driving gains.
Employment was up in four provinces, Ontario (35k), Quebec (27k), New Brunswick (4k), and PEI (0.8k). Declines were seen in Newfoundland and Labrador (-2.9k), Saskatchewan (-4.5k), and Manitoba (-4.2k).
Lastly, total hours worked rose 1.3% month-on-month and wages were up 3.4% year-on-year.
Key Implications
The good times keep on rolling for the Canadian labour market. After last month’s massive jobs gain, some slowing in job growth was expected. But with over 70 thousand new jobs gained and an unemployment rate at 5.3%, the Canadian economy keeps pushing the boundaries of maximum employment. This tight labour market should continue to push wages higher in the coming months. In our view, there is a lot of room for wages to catch-up as Canadian’s have seen their purchasing power eroded alongside the rapidly rising cost of living.
The Bank of Canada won’t need any more convincing, as it is well justified to hike its policy rate by 50 basis points on Wednesday. We are expecting hawkishness from the Bank as it is likely to signal many more rate hikes over the rest of this year. Canadian yields are jumping once again this morning, with the CA2Y yield (a monetary policy signal) up 9 basis points and the CA10Y yield up 8 basis points.
