- 15K jobs created in February while labour force dipped by 19.6K pushing unemployment rate to 6.6%
- Today’s labour market report went some distance to allay concerns about the mix of part-time and full-time job creation with 105K full-time positions created and 89K part-time jobs lost. In the first two months of the year, full-time employment grew 121K.
- Service sector employment rose 30K while goods producers cut 15K positions
- The unemployment rate fell 0.2 ppt to stand at the lowest level since November 2008
- Participation in the labour market fell in February however 175K more people were in the labour force than a year earlier
- Hours worked rose 0.2% from January; pace of decline from a year ago eased to -0.3% from -0.8%
- Wage growth remains tepid, earnings for permanent workers rose 1.1% from February 2016
Our Take:
Another, albeit more modest, rise in employment in February kept the string of gains running that started last summer just as the economy shifted into higher gear. The stronger growth generated increased demand for labour and a rise in capacity usage with the utilization rate touching a two-year high in late 2016. These reports may give the Bank fodder to reassess the degree of "persistent economic slack in Canada". The wage numbers however have been surprisingly weak and appear out of whack with strong employment gains with the six-month run rate at 36K. Given the lag between job creation and higher wage demands, a recovery in wage growth is likely to materialize later this year. Additionally, the rebound in commodity prices and stronger growth are fueling expectations that inflation will move higher, not lower as was the concern early last year. In its March statement, the Bank also went out of its way to contrast conditions at home with those in the US delivering a clear message that even if the Fed ramps up the pace of rate increases, hikes in Canada are a long way off.
