Highlights:
- March employment gain of 32K, more than expected, though job losses of 40K were recorded in Q1
- Full-time employment rose by 78K in the first quarter while part-time job losses totaled 118K
- The unemployment rate was 5.8% in March and averaged the same in Q1—lowest since the mid-1970s. The broadest measure of unemployment (seasonally adjusted) averaged 8.3% in Q1 matching the record low.
Our Take:
Despite the 32K rise in job creation in March, the economy posted its first quarterly decline in employment since Q3 2010. While disappointing, the details show the number of people employed full-time continued to rise (up 78K) in the first three months of 2018. Part-time employment posted a hefty 118K drop however this was mainly due to January’s 137K plunge. The unemployment rate and a broader measure that includes those who are underemployed fell again in the first quarter. The unemployment rate averaged 5.8% in Q1, the lowest since the mid-1970s and the broader U8 measure matched the lowest on record at 8.3%.
Wage growth also firmed up in the first quarter pushed along by the jump in Ontario’s minimum wage. Even ex-Ontario, average wage inched higher to 3.0% from 2.9% in Q4. The Bank of Canada acknowledged the pickup in wages in their March statement though posited that the rate of increase remained below what “typically” occurs when there is no slack in the labour market. The combination of historically low levels of unemployment and steady acceleration in the pace of wage gains is testing the Bank’s argument that slack in the labour market remains. On Monday, the bank’s Business Outlook Survey will be released. In the previous report, a growing number of companies reported labour shortages with the intensity of these shortages up relative to a year earlier. The bank will no doubt be watching to see if these trends persisted in early 2018. When you layer on the stealth increase in core inflation, the case for the Bank to delay pulling back on the currently highly stimulative monetary conditions until the second half of the year is weakening.
