Yahoo Finance Canada job market still full steam ahead with whopping 150,000 jobs gained
The latest jobs report could have implications for future Bank of Canada interest rate moves
Canadian employers continued to churn out jobs in January, adding 150,000 positions, Statistics Canada reported on Friday, complicating the path forward for the Bank of Canada.
The consensus among economists surveyed by Bloomberg was for a gain of 15,000 jobs.
The January increase was mostly in full-time work, led by the wholesale and retail, and healthcare sectors.
“Another month, another blockbuster job print for the Canadian economy,” Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note to clients.
The unemployment rate remained unchanged at 5.0 per cent, close to the near-record low of 4.9 per cent reached in the summer.
“Even though today's jobs figure was well above expectations, the unemployment rate held steady at 5.0%. Strong population growth, combined with an increase in participation, appears to have supported employment growth without making the labour market any tighter,” Grantham said.
The six-figure gain in January comes after an exceptionally strong December. Statistics Canada initially reported 104,000 jobs were created, but revised that lower to a still-strong 70,000 jobs.
“The fact that gains were concentrated in full-time jobs in the private sector, alongside people working more hours, makes this an even more impressive report. Although the seasonal adjustment should be called into question, the sheer size of this print points to a further boost to consumer spending and overall GDP to start the year,” James Orlando, director and senior economist at TD Economics, said in a note.
Average hourly wage growth moderated to 4.5 per cent, the first time in eight months that wage growth has fallen below the five per cent mark.
A tough path ahead for Bank of Canada
The strength in the labour market has been at odds with the Bank of Canada’s aggressive interest rate hikes.
In its first-ever summary of deliberations, Canada's central bank revealed that the hot economy was the main reason it opted to hike its benchmark rate by a further 25 basis points to 4.5 per cent last month, rather than pause its tightening campaign.
The Bank of Canada says it’s on a ‘conditional pause’ in its rate hiking plan, to assess how the economy reacts.
“The Bank of Canada's conditional pause on interest rates was likely done partly so that policymakers didn't feel the need to respond to any single strong data print, no matter how strong, but rather assess how the economy is faring over the course of a few months,” Grantham said.
“However, that won't stop markets reacting to today's strong data by pricing in a greater probability of further hikes, and pricing out rate cuts.”
Many Bay Street economists expect the impact of rate hikes to be felt more broadly this year as they work their way through the economy.
“Today's report is sure to raise eyebrows at the Bank of Canada. Their conditional pause on further rate hikes is predicated on a slowing of economic growth and an easing in the labour market. The Bank won't adjust course after one report, but it will be closely watching to see if this trend of massive job gains continues,” TD’s Orlando said.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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