Fewer Canadians returned to work in March than expected, and the jobless rate remained at 8.2 percent, according to Statistics Canada on Friday, easing pressure on the Bank of Canada to raise interest rates. In the first disappointing employment report since December, the economy added 17,900 net jobs in March following gains of 20,900 in February and 43,000 in January.
-- Economy adds 17.900 jobs in March
-- Unemployment rate unchanged at 8.2 percent
-- Strength in part-time jobs, private sector hiring
-- Economists say data reflects steady recovery
Analysts surveyed by Reuters had forecast a gain of 25,000 positions. The Canadian dollar hit a session low of C$1.0061, or 99.39 US cents after the report. It was trading near parity with the US dollar just before the data. But economists said that while the gains were modest, they reflect a steady economic recovery. "It's not a big deal. Canada's economy is still creating jobs ... When you consider that employment is trending up and providing fuel for consumer spending, it bodes well for the economic outlook," said Sal Guatieri, senior economist at BMO Capital Markets.
The employment data may give the Bank of Canada some breathing room as it ponders when to withdraw extraordinary stimulus measures from the economy. The bank has signalled it won't raise its benchmark interest rate from a record low of 0.25 percent before July, unless inflation becomes a threat.
With inflation already hovering near the bank's 2 percent target, markets expect the first rate hike in July, although they have priced in a chance that the bank could start tightening in June. "With the unemployment rate still high, (the Bank of Canada's) expectation is that it should keep inflation low. Hopefully we will see confirmation of that with the March CPI report," said Paul Ferley, assistant chief economist at Royal Bank of Canada.
"But as things stand right now, I think they will stick to their conditional commitment of holding the overnight rate steady at a quarter of a percent," he said. Yields on overnight index swaps, which trade based on expectations for the central bank's key policy rate, edged lower after the data, suggesting the market sees rate hikes as slightly less likely.
The rising consumer prices along with other stronger-than-expected data have led to predictions of robust first quarter growth that could surpass the 5 percent growth, annualised, in the fourth quarter. Since the labour market began recovering last July, 176,000 people have found work, but that is less than half the number who lost their jobs in the nine months prior to July. The gains in March were credited to the creation of part-time employment, which offset a decline in full-time positions. However, in a positive sign of economic recovery, the private sector did most of the hiring as public sector hiring waned.
Employment grew most in professional, scientific and technical services, followed by construction and natural resources. Goods-producing industries overall added 39,800 jobs, and the services sector shed 21,900 jobs. The average wage of permanent employees rose 2.5 percent in March from a year earlier, the same rate of increase as in February.
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